It's our money. Keep it in our neighborhoods.

We need a strong Community Reinvestment Act.

#TreasureCRA

Weaken CRA now? That’s a blueprint for the crisis after the crisis.
CRA will be essential for COVID-19 economic recovery in the communities hardest hit by the pandemic.

The Community Reinvestment Act was passed in 1977 to end discrimination known as redlining.

It required banks to meet the credit needs of the communities where they do business. Discrimination in lending is still a problem. Yet some want to substantially weaken the law. We can’t allow that to happen.

Help us spread the word in your community. 

Use the tools on this page to reach your friends and local leaders.

See what is at risk in your community with this tool. Include these findings in a comment letter about the proposed rules.

WE NEED TO MODERNIZE CRA, NOT RELAX IT.

Take Action

Submit A Comment

The Federal Reserve Board (Fed) has issued an Advance Notice of Proposed Rulemaking (ANPR) on the Community Reinvestment Act (CRA). The ANPR’s proposals improve upon the current CRA exam structure in contrast to the Office of the Comptroller’s final rule, which dramatically weakens CRA.

Overall, the Fed’s approach is a good first step but NCRC will be seeking more rigor in some of the performance measures in order to ensure that CRA ratings will not be as inflated as they are today. More rigor is key to ensuring that CRA exams leverage more lending, investing and services for communities of color and low- and moderate-income communities.

How to Comment

Members of the public can comment to the Federal Reserve Board via email: regs.comments@federalreserve.gov. The Fed asks that the subject line of the comment and email include the Docket Number R-1723 and RIN Number 7100-AF94. 

It is also possible to submit letters via the Fed website by going to this linkIt should be noted that submissions to the Fed website can be NOT attachments, only text. If you want to submit a PDF or a Word document, it would be best to email your comment to the above email address. 

If you would like read ALL comments submitted to the Fed ANPR, or check to see if your comment has posted, go to this link.

The comment period ends on February 16th at 11:59 pm.

Short Comment letter

Docket Number R-1723 and RIN Number 7100-AF94

To Whom it May Concern:

The Federal Reserve Board (Fed) must strengthen CRA exams in order to promote recovery from the COVID-19 pandemic. The Fed has described approaches in its Advance Notice of Proposed Rulemaking (ANPR) on CRA that will make CRA exams more objective. Yet, questions remain about whether the Fed’s approach will make grading tougher. If nearly every bank continues to pass their CRA exams, banks will not engage in serious efforts to help communities of color and low- and moderate-income (LMI) neighborhoods recover from the pandemic.

(Provide sentences here about how your organization engages in neighborhood development and is fighting COVID-19).

NCRC recently released a report finding a strong relationship between redlining and susceptibility to COVID. Redlined neighborhoods have the highest levels of health conditions such as asthma, diabetes and kidney disease, which make residents more susceptible to COVID-19. Life expectancy is almost four years lower in the redlined communities.

Since the start of the pandemic, about 41% of African American businesses have been closed compared to just 17% of White-owned small businesses. Discrimination in lending contributes to these differences in survival rates. A NCRC investigation found that African Americans applying for Paycheck Protection Program (PPP) loans for their small businesses during the pandemic were likely to receive less information than Whites.

CRA must be strengthened in order to combat discrimination. The Fed emphasizes improving the performance measures on CRA exams including those used on the lending test that compare a bank’s percent of loans to LMI borrowers to other lenders. The Fed does not describe in detail the impact of its reforms on CRA ratings except to hint that banks may continue to receive the same grades.

Moreover, the Fed is proposing to reduce the number of ratings on a state level and on subtests from five to four. This proposal would result in fewer distinctions in performance whereas new CRA exams must reveal more distinctions in order to motivate banks to be more responsive to COVID-19 recovery needs. Five ratings must be retained on the state level and on subtests.

The Fed asks whether underserved areas should be designated based on high levels of poverty or low levels of retail lending. NCRC advocated an approach based on low levels of lending which would effectively target redlined neighborhoods and communities of color.

We also ask the Fed to consider explicitly including race on CRA exams. The agencies have hesitated to do so but we believe that the CRA statute allows this since the law emphasizes banks meeting credit needs in all communities, but particularly underserved ones. CRA exams could include performance measures assessing lending, investing, branching and services to people of color and communities of color. The Fed could also provide CRA consideration for lending and investing in majority minority census tracts outside of assessment areas just as the Fed is considering for Indian reservations and other underserved areas.

In the interest of reaching underserved areas, we strongly support the Fed’s proposals to improve data collection including community development financing data, which would better enable stakeholders to determine communities most in need.

We support the Fed’s proposals to expand assessment areas, which are geographical areas on CRA exams. In addition to areas around branches, assessment areas must also include areas outside of branches with significant amounts of bank lending or deposit taking.

We do not support expanding financial education to any income since LMI consumers and people of color are most likely to be unbanked as revealed by surveys of the Federal Deposit Insurance Corporation (FDIC). Likewise, the Fed should further develop its procedures for awarding CRA credit for financing affordable housing that is unsubsidized so that such financing actually serves LMI residents.

Finally, we applaud the Fed proposal to eliminate distinctions in the rigor of examination among assessment areas that have resulted in banks neglecting smaller cities, rural counties and Native American reservations.

We appreciate the direction the Fed has embarked upon but caution that it must not end up with proposals that replicate existing CRA ratings inflation as this will not help our communities devastated by COVID-19.

 

Long Comment letter

Docket Number R-1723 and RIN Number 7100-AF94

To Whom it May Concern:

The Federal Reserve Board (Fed) must strengthen the rigor of CRA exams in order to promote recovery from the COVID-19 pandemic. The Fed has described approaches in its Advance Notice of Proposed Rulemaking (ANPR) on CRA that will make CRA exams more objective and transparent. Yet, questions remain about whether the Fed’s approach will reduce the high rate of CRA inflation. If nearly every bank continues to pass their CRA exams, banks will not engage in strenuous efforts to help communities of color and low- and moderate-income (LMI) neighborhoods recover from the pandemic’s devastation.

(Provide sentences here about your organization and how your organization engages in neighborhood revitalization and is fighting COVID-19).

Strengthening CRA is a critical component of a just recovery

The National Community Reinvestment Coalition (NCRC) recently released a major report finding significant correlations between redlining and susceptibility to COVID. In the 1930s, the Home Owners Loan Corporation (HOLC) commissioned the production of maps that rated neighborhoods based on the risk of lending in them. Working class and minority neighborhoods usually received the riskiest designation of hazardous. The designations subsequently facilitated redlining and discrimination against these neighborhoods, which remain starved of credit and are predominantly lower-income and minority. These neighborhoods also have the highest incidence of health conditions such as asthma, diabetes, kidney disease and stroke, which make residents more susceptible to COVID-19. Life expectancy is almost four years lower in the redlined communities than the neighborhoods not designated as hazardous by HOLC.

Since the start of the pandemic, more than 440,000 African American businesses have been closed or 41% compared to just 17% of White-owned small businesses. Discrimination in lending contributes significantly to racial disparities in small business survival rates. A NCRC investigation found that African American testers applying for Paycheck Protection Program (PPP) loans for their small businesses during the pandemic were likely to receive less information or encouragement to apply than White testers. CRA must be strengthened considerably in order to combat discrimination and help our communities recover from the pandemic.

The Federal Reserve proposal must be strengthened to prevent grade inflation

However, it is unclear if the Fed’s ANPR proposals will address CRA ratings inflation. The Fed emphasizes improving the performance measures on CRA exams including those used on the lending test that compare a bank’s percent of loans to LMI borrowers and communities to other lenders. However, the Fed proposes thresholds that appear to replicate the high ratings on CRA exams. The Fed does not describe in any detail the impact of its initial thresholds on CRA ratings and hints the thresholds replicate the current CRA ratings distribution.

Moreover, the Fed is proposing to reduce the number of ratings on a state level and on subtests from five to four. This proposal would result in fewer distinctions in performance whereas a new CRA exam system must reveal more distinctions in performance in order to motivate banks to be more responsive to COVID-19 recovery needs. Five ratings must be retained on the state level and on subtests.

The Federal Reserve proposal should be strengthened to increase lending to people of color

The Fed recognizes the importance of addressing racial inequities. It asks the public whether underserved areas should be designated based on high levels of poverty or low levels of retail lending. We support NCRC’s designation of underserved census tracts based on low levels of lending which would effectively target neighborhoods redlined because of the HOLC classifications.

We also ask the Fed to consider explicitly including race on CRA exams. The agencies have hesitated to do so but we believe that the CRA statute allows this since the law emphasizes banks meeting credit needs in all communities, but particularly underserved ones. CRA exams could include performance measures assessing lending, investing, branching and services to people of color and communities of color. In addition, CRA exams can include racial and ethnic demographic data in performance context analysis and require banks to affirmatively include communities of color in their assessment areas (geographical areas on CRA exams). The Fed could also provide CRA consideration for lending and investing in majority minority census tracts outside of assessment areas just as the Fed is considering for Indian reservations and other underserved areas.

Assessment areas must support and reflect a commitment to local lending, investments and services

We support the Fed’s proposals to expand assessment areas on CRA exams. In addition to areas around branches, assessment areas must also include areas outside of branches with significant amounts of bank lending or deposit-taking. We do not support the idea of a national assessment area for internet banks that the Fed discusses. Instead, we believe that data analysis can designate areas where high numbers of retail loans or deposits are located.

We applaud the Fed proposal to eliminate distinctions between full-scope and limited-scope assessment areas. Full-scope assessment areas, which are usually the largest cities, count more on current CRA exams than limited-scope areas that generally are smaller cities and rural counties. Often, communities of color, Native American reservations and other underserved communities continue to receive less CRA-related loans and investments because they are in limited-scope areas.

CRA modernization must maintain its focus on lower-income communities and communities of color

Unlike the Office of the Comptroller (OCC), the Fed generally does not stray away from the focus on LMI communities in its ANPR proposals. However, we do not support expanding financial education to any income since LMI consumers and people of color are most likely to be unbanked or underbanked as revealed by surveys conducted by the Federal Deposit Insurance Corporation (FDIC). The Fed can designate additional subgroups in the population such as people of color, people with disabilities or older adults for whom CRA credit for financial education or other community development activity can be earned instead of opening it up to everyone regardless of need. Likewise, the Fed should further develop its procedures for awarding CRA credit for financing affordable housing that is not subsidized so that such financing actually serves LMI tenants.

Collecting improved community development and deposit data

Finally, the Fed should pursue its proposals to collect improved community development and deposit data. Community development and deposit data should be collected on a census tract level or at least on a county level so that CRA exams can better target community development financing to areas of need.

Conclusion

We appreciate the direction the Fed has embarked in its ANPR but caution that it must not end up with a set of proposals that replicate existing CRA ratings inflation as this will not help our communities devastated by COVID-19. We believe that this proposal serves as an important starting point for an interagency rulemaking that will strengthen CRA and take a critical step towards more financially resilient communities and an equitable recovery.

View more tools and resources  for hospitals, health systems and medical professionals.

Use this sample comment letter as a guide for yours.

Hospitals and Health Care

To: regs.comments@federalreserve.gov

Subject: RE: Notice of Proposed Rulemaking, Community Reinvestment Act Regulations, Docket Number R-1723, RIN Number 7100-AF94

To Whom It May Concern:

On behalf of the Sample Hospital System, a non-for-profit health system in Sample City, USA, I would like to convey my support of the Federal Reserve’s Advanced Notice of Proposed Rulemaking (ANPR) on the Community Reinvestment Act (CRA). We believe that the proposed changes to the Community Reinvestment Act regulations outlined in the ANPR by the Federal Reserve Board will build upon and enhance the current CRA regulations, not tear them down as the final rule of the Office of the Comptroller of the Currency does.

Sample Hospital System is the largest hospital system in the Sample Region. We have grown significantly over the past 15 years, employing more than 8,000 individuals and operating 55 speciality acute care facilities. Our health system has more than 3,000 beds in 22 states. We serve more than 5 million patients annually.

The Federal Reserve Board ANPR proposes to build upon the existing CRA exam structure of separate tests for retail and community development activity. Separate tests are needed in order to ensure banks are responding adequately to the variety of local needs. The board is exploring how to create assessment areas, geographical areas on CRA exams that receive ratings, that will capture lending and deposit-taking activity outside of branch networks.

The board’s ANPR follows a final CRA rule issued in May 2020 by the Office of the Comptroller of the Currency (OCC). The OCC’s rule would decrease lending, investment and services in low- and moderate-income (LMI) communities by over-simplifying performance measures on CRA exams and broadening what counts on CRA to include activities that either partially or tangentially benefit LMI communities, including infrastructure like major bridges that may not be in or near LMI communities.

As a leader in patient care for the Sample Region, we know (and much research supports) that health outcomes are only a small part due to clinical care and personal behavior, while 60% can be attributed to social and environmental conditions, such as affordable and stable housing, income, job opportunity, proximity to healthy food options and education. Stable housing, in particular, is a cornerstone of optimal health outcomes.

In order to best promote health, we need healthy housing, steady job growth, decent schools, and green spaces in our communities. A strengthened CRA is needed to encourage banks to make loans and investments for affordable housing, community facilities and local small businesses. While we appreciate the Federal Reserve’s overall approach, we are concerned that the board must ensure its tests and performance measures do not end up replicating the high pass rates and ratings that banks currently receive and that do not reveal much distinctions in performance. Banks will be encouraged to increase their loans and investments in neighborhoods only if the final regulation produces rigorous exams.

In addition, we applaud the board’s proposals to improve the publicly available CRA data. In particular, community development activities will be increased if banks are held accountable via publicly available data. This data would reveal how many loans and investments banks are making in the various categories of community development compared to their peers.  

Sample Hospital has collaborated with several community-based organizations in our region to invest in upstream projects that enhance the social determinants of health for our most vulnerable community members. Banks that we partner with look to CRA credit as added incentive to collaboration. Strengthening CRA offers the potential for greater collaboration between hospitals and banks to invest in and create healthy communities.

Sample Hospital urges the Federal Reserve to consider the health of underserved communities as part of a robust CRA.

We believe that this proposal serves as an important starting point for an interagency rulemaking that will strengthen CRA and take an important step towards more financially resilient communities and an equitable recovery. Thank you for providing this opportunity for Sample Hospital to comment on this critical rulemaking.

Sincerely,
Name
Title, Organization

The following sample resolution provides the history, purpose, and some of the basic functions of CRA and includes the key principles that are critical to preserve in the on-going regulatory reform effort by the nation’s bank regulators.

This template is a start and can be adapted by non-profits, localities, state legislatures and other governing bodies moved for immediate adoption. It should also include one or more clauses about the importance of CRA or the role it has played that is specific to the moving organizations or the local/state jurisdiction.

RESOLUTION TO PROTECT THE COMMUNITY REINVESTMENT ACT -TO ENSURE THAT EFFORTS TO MODERNIZE REGULATIONS DO NOT UNDERMINE THE INTENT OF THE LAW  

WHEREAS, the Community Reinvestment Act (CRA) was enacted on October 12, 1977 to end the practice of “redlining” by financial institutions where they would draw a red line on a map around the neighborhoods they did not want to offer financial services;  before the enactment of the CRA, redlining made it near impossible for low- and moderate-income Americans, racial and ethnic minorities, and their neighborhoods to access credit services, such as mortgages and business loans, regardless of their qualifications or creditworthiness; and

WHEREAS, CRA was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets; and

WHEREAS, discrimination in lending is still a problem; and

WHEREAS, the CRA states that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered”; and

WHEREAS, the CRA establishes a regulatory regime for monitoring the level of lending, investments, and services in low- and moderate-income neighborhoods traditionally underserved by lending institutions; examiners from three federal agencies assess and “grade” a lending institution’s activities in low- and moderate-income neighborhoods; and

WHEREAS, the federal agencies conducting CRA examinations are: the Office of the Comptroller of the Currency (OCC), which examines nationally chartered banks and the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board – both of whom examine state-chartered banks; and

WHEREAS, if a regulatory agency finds a financial institution not serving these neighborhoods, it can delay or deny that institution’s request to merge with another lender or to open a branch or expand any of its other services; the financial institution regulatory agency can also approve the merger application subject to specific improvements in a bank’s lending or investment record in low- and moderate-income neighborhoods; and

WHEREAS, a financial institution’s CRA grade can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on their fair lending exams that occur at about the same time as CRA exams; and

WHEREAS, since 1996, according to analysis of bank lending data by the National Community Reinvestment Coalition (NCRC), CRA-covered banks issued almost 29 million small business loans in low- and moderate-income tracts, totaling $1.156 trillion, and $1.179 trillion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and

WHEREAS, a 2016 review of the CRA examinations of intermediate small banks(ISBs)/mid-sized banks (banks with asset sizes today between $313 million and $1.252 billion) found that ISBs produced over $9.3 billion of community development (CD) loans and grants; and

WHEREAS, studies have found that CRA-covered home lending is safer and sounder than non-CRA covered lending; when a larger share of lending is issued by CRA-covered banks than by independent mortgage companies, a neighborhood experiences lower delinquency rates and less risky lending; and

WHEREAS, despite the tremendous benefits of CRA to communities, the full potential of CRA has not been realized because it has not been updated to take into account changes in the banking industry and the economy; independent mortgage companies not covered by CRA now make more than 50 percent of the home mortgage loans in America and financial technology companies (“Fintech”) not covered by CRA operating via the internet are rapidly increasing their lending; and

WHEREAS, notwithstanding the need to modernize CRA, we are concerned about ideas from some federal regulators that would substantially weaken the law; and

WHEREAS, geographic assessment areas must remain the focus of CRA exams for all banks; banks should continue to be graded based on every geography where they lend or receive a significant percentage of their deposits; banks cannot be allowed to cherry-pick where they lend – and where they don’t lend at all or to ignore the credit needs of distressed and vulnerable communities; and

WHEREAS, regulators review of a bank’s CRA commitment should not be consumed by an approach that is primarily driven by dollar amount. In May of 2020, the OCC finalized changes to its CRA regulations and implemented a presumptive rating which would mainly consist of the dollar amount of a bank’s total CRA activities divided by the bank’s deposits. CRA was designed to encourage the financial system to meet the credit and capital needs of people with low and moderate incomes and small businesses who frequently have a need for relatively smaller sized loans. Moving to a dollar volume approach would encourage larger deals at the expense of underserved borrowers the law was designed to protect; and

WHEREAS, the new OCC rule will allow 89% of the banks they regulate to opt for easier exams that will start right away and will result in more banks not having a service test that looks at their branching in lower income neighborhoods and in more banks not being evaluated for their community development financing;

WHEREAS, the OCC’s rule of 2020 would also move CRA away from its focus on low- and moderate-income families and communities and count the financing of large infrastructure projects and financial education for middle- and upper-income consumers; and

WHEREAS, CRA should explicitly state the law’s obligation to fairly serve all races and ethnicities; banks that engage in large-scale illegal and harmful activities should fail their CRA exams.

WHEREAS,  replacing a lending test for large banks that counted for 50% of the overall rating with a  pass/fail lending test will encourage banks to decrease their home and small business lending in communities of color and modest income communities;

WHEREAS, the new scoring system will radically devalue the importance of maintaining branches in neighborhoods with low- and moderate-incomes, despite strong evidence that branches are still heavily used by households with lower incomes; and

WHEREAS,  the rule  allows examiners at their discretion to grant multipliers of up to four times for activities that they consider innovative will result in inconsistent exams, inflated ratings, and reductions in in actual community development financing; and

WHEREAS, basing new assessment areas off of physical addresses of depositors is problematic since this information is not currently collected, and if collected would likely not be shared with the public, leaving cities to guess whether a bank has an obligation to serve their community; and

THEREFORE BE IT RESOLVED, that the (organization’s name), will support efforts to modernize CRA, but not relax or undermine the law’s goal and intent; and

BE IT FURTHER RESOLVED, that the  (organization’s name), opposes the OCC’s changes to CRA and urges the Federal Reserve Board and FDIC to refrain from these harmful changes that will thwart the economic recovery from COVOID and will divert resources from recovery efforts in low- and moderate-income neighborhoods and communities of color that have been disproportionately harmed by COVID;

BE IT FURTHER RESOLVED, that the (organization’s name), will support modernizing CRA to apply it to non-bank institutions including mortgage companies, financial technology companies, and credit unions; and

BE IT FURTHER RESOLVED, that the (organization’s name), will opposes the OCC’s changes that also  efforts to watered down the penalties under CRA for discrimination, and urges the Federal Reserve Board and FDIC to increase penalties for discrimination; and

BE IT FURTHER RESOLVED, that the (organization’s name), believes that banks should also be examined for how they are lending, serving and investing in underserved neighborhoods that have high minority populations, low capital flows and have had a history of redlining. While the Administration’s new CRA rules may give credit for bank activities in these neighborhoods, the OCC’s changes will not actively hold banks accountable for expanding opportunities for wealth building in communities of color; and

BE IT FURTHER RESOLVED, that the (organization’s name), will support a CRA with a clearly-defined grading system that emphasizes lending, bank branches, fair lending performance, and responsible loan products for working class families; and

BE IT FINALLY RESOLVED, that the (organization’s name), will support efforts to hold a bank accountable if it fails its CRA exam, or wishes to acquire a bank with a better CRA grade, and urge agencies to recognize and encourage community benefit agreements and efforts that motivate banks to make more loans, investments, and services available to traditionally underserved communities.

Respectfully submitted on _____,

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Toolkit

Spread the word about CRA. Here are some things you can use.

  • The Trump Administration says it wants to restart the economy. But one of its agencies just enacted new bank rules that will make recovery weaker, slower and more painful for lower-income communities and communities of color.
  • The Community Reinvestment Act (CRA) will be essential for COVID-19 economic recovery in the communities hardest hit by the pandemic.
  • The OCC decided to go against the majority of public comments and introduce new, gaping loopholes that will allow banks to reduce their focus on lower-income borrowers and communities by inflating CRA ratings and by earning more credit for big loans and investments.
  • Lower-income communities and communities of color have been the hardest hit by COVID-19. CRA will be essential for their economic recovery.
  • COVID-19 will drive neighborhoods deeper into poverty.
  • Any new rules should help lower-income communities and communities of color recover from COVID-19, and not make things worse for them.
  • This is not the way to reopen America. If the President of the United States is committed to an equitable recovery, he should immediately suspend this rule.
  • Some of the new rules will take years to implement. But some will take effect quickly and encourage banks to focus on bigger loans and investments rather than on smaller ones. The timing of that change couldn’t be worse, in the middle of a health and financial crisis that has been felt hardest in lower-income communities.
  • The new rules are an obstacle to COVID-19 recovery. They discourage small dollar loans and don’t give sufficient credit for waiving fees, forbearances or loan modifications.
  • The timing of the new rules isn’t just bad and tone-deaf in the middle of a health and financial crisis. It’s cruel and dangerous.
  • It’s an absurd and intentionally cruel moment to weaken the Community Reinvestment Act.
  • Individuals, families and entire communities that are already suffering disproportionately from COVID-19 will be harmed if these new rules are enforced.
  • Billions of dollars in bank loans, investments and philanthropy that should go to LMI neighborhoods to help with recovery could wind up going elsewhere.
  • The new rules focus on the dollar value of bank CRA activities. Banks will seek the biggest deals, regardless of community needs for smaller home and small business loans.
  • These changes are literally a plan to help banks do less for poor communitiesand communities of color.
  • The hardest hit communities will be most in need of reinvestment after COVID-19.
  • As the nation’s LMI communities look to recover from COVID-19, the government should raise and definitely not lower the bar for bank reinvestment in LMI communities.
  • If the OCC enforces these new rules, the defining legacy of Trump’s OCC won’t be that the agency managed and survived a crisis. It will be that the regulator intentionally harmed poor and minority communities that suffered the most from COVID-19.
  • CRA is supposed to make sure banks serve all the communities where they take deposits, not just the rich, White ones.
  • Almost nobody thinks the new rules are a good idea.
  • Even most bankers don’t like the new rules and they didn’t want to see these changes in the middle of a pandemic. COVID-19 is a crisis for them too.
  • The trade association representing most banks urged regulators to stop the rule-making process until after the COVID-19 crisis has passed.
  • Three agencies regulate banks. They should work together to set CRA rules. But two of them, the Federal Reserve and the FDIC, did not sign on to the new rules from the OCC.
  • The FDIC said that they don’t know what the effects of the proposed rule would be on overall CRA activity.
  • The OCC acknowledged an “overall mistrust in the OCC motivation and process.”
  • All three bank agencies should start over, work together and be in agreement on any plan to modernize CRA.
  • The current rules aren’t perfect, but they aren’t broken. The new OCC rules are a giant leap backwards at exactly the wrong moment.
  • The OCC took advantage of a nation in crisis to push through rule changes that will make recovery from the crisis more difficult.
  • Banks will be critical to local economies after COVID-19. So will the law that’s supposed to make sure banks serve their communities, the Community Reinvestment Act.
  • Any rule changes have to ensure that low and moderate income communities and communities of color have equal access to capital and credit.
  • Don’t let bank regulators use modernization as an excuse to weaken the law.
  • Even though the OCC announced new rules, we’re still working to stop them.
  • Banks are essential for local economies. They decide who gets mortgage and small business loans – and who doesn’t. Banks are also major sources of community development investment capital and philanthropic grants to local nonprofits. But there’s something else to bear in mind about banks: They also have a long, dark history and a well-documented recent record of discrimination.
  • Strong enforcement of CRA is still important for lower-income communities and communities of color. When banks are not held accountable and required to serve all the communities where they take deposits, the result is neglect, disinvestment and discrimination.
  • Under current rules, 98 percent of banks pass their CRA exams. The rules should be updated, but banks have managed well and earned record profits under the current rules. There is no need for the OCC’s new rules now.

#TreasureCRA

#itsOURmoney

#JustEconomy

  • Lower-income communities and communities of color have been the hardest hit by COVID-19. CRA will be essential for their economic recovery. #TreasureCRA

  • .@USOCC & @FDICgov’s proposed changes are an obstacle to COVID-19 recovery. They discourage small dollar loans and don’t give sufficient credit for waiving fees, forbearances or loan modifications.  #TreasureCRA

     

     

  • The timing of @USOCC & @FDICgov’s proposed change isn’t just bad and tone-deaf in the middle of a health and financial crisis. It’s cruel and dangerous.  #TreasureCRA

     

  • Individuals, families and entire communities that are already suffering disproportionately from COVID-19 will be harmed if @USOCC & @FDICgov’s new rules are enacted.

     

  • .@USOCC & @FDICgov’s proposed changes focus on the dollar value of bank CRA activities. Banks will seek the biggest deals, regardless of community needs for smaller home and small business loans. #TreasureCRA

     

  • Banks will be critical to local economies after COVID-19. So will the law that’s supposed to make sure banks serve their communities, the Community Reinvestment Act. #TreasureCRA

     

  • Tell @USOCC & @FDICgov, any rule changes have to ensure that low and moderate income communities and communities of color have equal access to capital and credit. #TreasureCRA

     

  • Don’t let bank regulators use modernization as an excuse to weaken the law. #TreasureCRA

  • The largest banks received 2.5 billion from tax cuts in the last quarter, and now they want to walk away from working class and poor communities. In response, we are launching the #TreasureCRA campaign for fairness in banking. Now we need to rally, dig deep and flood the government with our comments. We need your voice and your network: ncrc.org/treasurecra/#take-action
  • Tell the regulators: we will not stand by silently while others try to dismantle one of the landmark laws of the Civil Rights era. Join the #TreasureCRA campaign and submit your comment now: ncrc.org/treasurecra/#take-action
  • Tell the government: we can’t allow banks to cherry-pick where they lend – and where they don’t lend at all. We can’t allow a simple fraction to substitute for investment in local communities, or to mask its absence. ncrc.org/treasurecra/#take-action
  • CRA has been an essential tool to ensure banks meet the needs of the communities where they take deposits. But the proposed changes will make it easier for banks to cherry pick where they lend, and where they don’t. The time to act is now. We only have 60 short days to make an impact: ncrc.org/treasurecra/#take-action

Don’t strip ‘community’ out of a law that’s supposed to strengthen communities.

What We Want:

Geography must remain the focus of CRA exams for all banks. We want banks to be graded  based on every geography where they lend or receive a significant percentage of their deposits. Lending isn’t tied to bank branches the way it used to be. But branches are still essential for low- and moderate- income people. Geography still matters. Neighborhoods still matter.

What We Can’t Let Happen:

We can’t eliminate geographic assessment areas. We can’t allow banks to cherry-pick where they lend – and where they don’t lend at all. We can’t allow banks to ignore the credit needs of distressed and vulnerable communities. We can’t allow a reboot of redlining.

Protect communities of color with explicit language against racial discrimination.

What We Want:

We want new language explicitly stating the law’s obligation to fairly serve all races and ethnicities. Banks that engage in large-scale illegal and harmful activities should fail their CRA exams.

What We Can’t Let Happen:

In 2017, the Office of the Comptroller of the Currency (OCC) watered down the penalties for discrimination. We can’t allow regulators to allow banks to pass CRA exams if they discriminate.

Keep all lenders accountable.

What We Want:

We want the Community Reinvestment Act applied to all lenders, the same way it’s applied to traditional banks. The financial landscape has changed. Mortgage companies, credit unions, fintechs and other “nonbank” lenders now make the majority of the home loans in America.

What We Can’t Let Happen:

We can’t allow a majority of mortgage lenders to avoid CRA requirements. Banks and the Treasury Department have acknowledged that the financial landscape has changed, and that CRA should be updated to reflect the current marketplace and increase safe reinvestment in our communities.

Set a clearly-defined CRA grading system.

What We Want:

We want a clearly-defined grading system that emphasizes lending, branches, fair lending performance, and responsible loan products for working class families. We want each of these important aspects to get their due weight in analyzing a bank’s CRA performance. We do not support one ratio that lumps all of a bank’s activity together.

What We Can’t Let Happen:

We cannot allow a rating system that makes it easy for banks to pick the lowest hanging fruit and ignore critical community needs.

Don’t be afraid to let banks fail.

What We Want:

We need regulators unafraid to stand up to financial institutions. If a bank fails its CRA exam, or wishes to acquire a bank with a better CRA grade, agencies should recognize and encourage community benefit agreements. We want to motivate a race to the top across our financial industry.

What We Can’t Let Happen:

This spring, the OCC weakened its CRA enforcement by allowing banks with failed CRA ratings to merge, acquire, and grow their business. We cannot  allow regulators to adopt this policy. The “wink and nod” CRA exam has gone on long enough.

Read the rest of our principles for CRA reform.

Resolution To Protect The Community Reinvestment Act – To Ensure That Efforts To Modernize Regulations Do Not Undermine The Intent Of The Law

WHEREAS, the Community Reinvestment Act (CRA) was enacted on October 12, 1977 to end the practice of “redlining” by financial institutions where they would draw a red line on a map around the neighborhoods they did not want to offer financial services;  before the enactment of the CRA, redlining made it near impossible for low- and moderate-income Americans, racial and ethnic minorities, and their neighborhoods to access credit services, such as mortgages and business loans, regardless of their qualifications or creditworthiness; and

WHEREAS, CRA was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets; and

WHEREAS, discrimination in lending is still a problem; and

WHEREAS, the CRA states that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered”; and

WHEREAS, the CRA establishes a regulatory regime for monitoring the level of lending, investments, and services in low- and moderate-income neighborhoods traditionally underserved by lending institutions; examiners from three federal agencies assess and “grade” a lending institution’s activities in low- and moderate-income neighborhoods; and

WHEREAS, the federal agencies conducting CRA examinations are: the Office of the Comptroller of the Currency (OCC), which examines nationally chartered banks and the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board – both of whom examine state-chartered banks; and

WHEREAS, if a regulatory agency finds a financial institution not serving these neighborhoods, it can delay or deny that institution’s request to merge with another lender or to open a branch or expand any of its other services; the financial institution regulatory agency can also approve the merger application subject to specific improvements in a bank’s lending or investment record in low- and moderate-income neighborhoods; and

WHEREAS, a financial institution’s CRA grade can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on their fair lending exams that occur at about the same time as CRA exams; and

WHEREAS, since 1996, according to analysis of bank lending data by the National Community Reinvestment Coalition (NCRC), CRA-covered banks issued almost 29 million small business loans in low- and moderate-income tracts, totaling $1.156 trillion, and $1.179 trillion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and

WHEREAS, a 2016 review of the CRA examinations of intermediate small banks(ISBs)/mid-sized banks (banks with asset sizes today between $313 million and $1.252 billion) found that ISBs produced over $9.3 billion of community development (CD) loans and grants; and

WHEREAS, studies have found that CRA-covered home lending is safer and sounder than non-CRA covered lending; when a larger share of lending is issued by CRA-covered banks than by independent mortgage companies, a neighborhood experiences lower delinquency rates and less risky lending; and

WHEREAS, despite the tremendous benefits of CRA to communities, the full potential of CRA has not been realized because it has not been updated to take into account changes in the banking industry and the economy; independent mortgage companies not covered by CRA now make more than 50 percent of the home mortgage loans in America and financial technology companies (“Fintech”) not covered by CRA operating via the internet are rapidly increasing their lending; and

WHEREAS, notwithstanding the need to modernize CRA, we are concerned about ideas from some federal regulators that would substantially weaken the law; and

WHEREAS, geographic assessment areas must remain the focus of CRA exams for all banks; banks should continue to be graded based on every geography where they lend or receive a significant percentage of their deposits; banks cannot be allowed to cherry-pick where they lend – and where they don’t lend at all or to ignore the credit needs of distressed and vulnerable communities; and

WHEREAS, regulators review of a bank’s CRA commitment should not be consumed by an approach that is primarily driven by dollar amount. The OCC and FDIC propose a presumptive rating which would mainly consist of the dollar amount of a bank’s total CRA activities divided by the bank’s deposits. CRA was designed to encourage the financial system to meet the credit and capital needs of people with low and moderate incomes and small businesses who frequently have a need for relatively smaller sized loans. Moving to a dollar volume approach would encourage larger deals at the expense of underserved borrowers the law was designed to protect; and

WHEREAS, the OCC’s and FDIC’s proposal of January 2020 would also move CRA away from its focus on low- and moderate-income families and communities and count the financing of sports stadiums, middle-income rental housing, and financial education for middle- and upper-income consumers; and

WHEREAS, CRA should explicitly state the law’s obligation to fairly serve all races and ethnicities; banks that engage in large-scale illegal and harmful activities should fail their CRA exams.

WHEREAS, allowing banks to fail in half of the markets they take deposits from and still pass their CRA performance evaluations will allow banks to pick and choose where they proactively support the credit and capital needs of people with low- and moderate-incomes, and ignore them in other markets where they currently have an obligation; and

WHEREAS, the new proposed scoring system will radically devalue the importance of maintaining branches in neighborhoods with low- and moderate-incomes, despite strong evidence that branches are still heavily used by households with lower incomes; and

WHEREAS, proposal to give a multiplier of two to many ways that banks already finance community development for CRA credit, which is likely to lead to a reduction in actual community development financing; and

WHEREAS, basing new assessment areas off of physical addresses of depositors is problematic since this information is not currently collected, and if collected would likely not be shared with the public, leaving cities to guess whether a bank has an obligation to serve their community; and

THEREFORE BE IT RESOLVED, that the (organization’s name), will support efforts to modernize CRA, but not relax or undermine the law’s goal and intent; and

BE IT FURTHER RESOLVED, that the  (organization’s name), will oppose regulators efforts to raise bank thresholds and exempt more banks, such as ISBs/mid-sized banks, from examination of their community development lending and investments; and

BE IT FURTHER RESOLVED, that the (organization’s name), will support modernizing CRA to apply it to non-bank institutions including mortgage companies, financial technology companies, and credit unions; and

BE IT FURTHER RESOLVED, that the (organization’s name), will oppose regulators efforts to water down the penalties under CRA for discrimination; and

BE IT FURTHER RESOLVED, that the (organization’s name), will support a CRA with a clearly-defined grading system that emphasizes lending, bank branches, fair lending performance, and responsible loan products for working class families; and

BE IT FINALLY RESOLVED, that the (organization’s name), will support efforts to hold a bank accountable if it fails its CRA exam, or wishes to acquire a bank with a better CRA grade, and urge agencies to recognize and encourage community benefit agreements and efforts that motivate banks to make more loans, investments, and services available to traditionally underserved communities.

Respectfully submitted on _____,

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We’re counting on these people and organizations.

Importance of local press

 While many local news outlets continue to struggle, some are holding on, continue to report on local issues and have attentive audiences focused on them. These local media providers can be an important channel to reach local audiences and leaders and an invaluable resource for community organizations trying to build momentum for a national law that seems at times more inside-the-beltway than community-focused. And for all the political games swirling around CRA reform right now – the people who will be most affected will be you and your neighbors. Let’s work together to get the word out – we will not let the CRA be gutted – and together we can start a new movement to further a just economy for all.  

There are several ways to get your point of view into local media:

  • Contact a reporter and encourage them to write a news story about CRA
  • Submit a guest column about CRA to an opinion section
  • Send a letter to the editor about CRA
  • Persuade an editorial board to write an editorial about CRA

How to reach out:

  1. Determine what local and regional media are available to you – online, newspapers, magazines, TV, radio, blogs, podcasts, Facebook, LinkedIn and Meetup groups. Even NextDoor or local email lists might be an option. Determine if they cover topics that fall under CRA (banking, lending, housing, community development, economic development, community benefits…etc).
  2. Find the appropriate reporter. It could be someone who covers local business and banking, or housing, development, urban renewal, poverty, discrimination or social services. Study their work. Find connections with your work.
  3. Formulate your pitch. Send via email. Follow up by phone if you don’t get a response. Being able to put your face with your name will help you build the relationship. Attend press events or ask to meet up for coffee and make your pitch then.
  4. Local reporters are busy, they don’t have a lot of time for coffee and conversation. When you get responses, be sure to respond asap.
  5. If a reporter likes your pitch, be sure to help find sources and set up interviews, preferably with members of your organization and/or community.
  6. Once published, be sure to share far and wide with your entire network, including with NCRC.

Sample Pitch:

Bank regulators in Washington have published new rules to change the Community Reinvestment Act, a law enacted in 1977 to get rid of discrimination that was once common in mortgage and small business lending by banks. Redlining was once widespread across America, and it happened here too. It kept capital out of neighborhoods where minorities and immigrants lived. CRA was passed to put a stop to that.

But discrimination in lending is still a problem. This law has a direct impact on [city / our community]. Our local banks make mortgage and small business loans, as well as grants to local nonprofits, in order to comply with the law. The proposed changes ould have a big impact here, especially on low- and moderate-income people. Would you be interested in writing about this issue and why it matters to our community? If so, I’d love to share more info with you.

Example Local Article:

New Orleans Needs a Stronger, Not a Weaker Community Reinvestment Act

 OpEd’s:

OpEd’s are another way to get local press coverage. Here you write an opinion piece and then shop it around to local papers and magazines. Most outlets have their own requirements, so be sure to check with them before you write and pitch your piece.

Suggested Content:

We suggest you start your OpEd off with local impacts. What has CRA done for your community in the past? How will the proposed changes halt these investments? And then you can use some of our talking points below to further bring home the point that these proposed changes are disastrous for our underserved communities.

All parties invested in the Community Reinvestment Act (CRA) – bankers, regulators, community leaders and watchdog groups – have agreed for some time that CRA was in need of modernization to reflect changes in how people access banking services today opposed to in 1977 when the act was first enacted. However, there is no doubt that the proposed changes from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) would greatly diminish the effectiveness of the law and does a terrible job of addressing our mutual concerns. Instead, the agencies came up with ways for banks to do less for lower-income neighborhoods and borrowers, and a host of complex and confusing options.

When 98% of banks already pass their CRA exams, do we really need to make it easier for them? This is exactly what the rules proposed in December would do. It would even make it easier for banks to cherry-pick where they do business by reducing the importance of assessment areas. Banks would be able to invest outside of their assessment areas before they have met the needs within their assessment areas and still receive full credit on their CRA exams. They would also be able to completely ignore half of their assessment areas, because they only need to pass 50% of their CRA exams to receive an outstanding rating.

But that isn’t even the worst of it. With the one ratio metric, an overly simplistic measure that divides the dollar value of CRA activities by the bank’s total deposits, banks would likely favor larger loans and investments. Add in the fact that large infrastructure projects like bridges and sports stadiums in Opportunity Zones are worthy of CRA credit, and it is clear that these proposed changes do nothing short but encourage banks to reduce their lending to lower-income borrowers in lower-income neighborhoods, neighborhood-based nonprofit organizations, small business and home mortgages. Because what would you do if you had the choice between a high-dollar, high-return project or a bunch of small, low-return investments?  (note – if you have a large infrastructure project planned or in the works in your community, it would be good to highlight it here and show how it could skew community investments)

Banks are literally being told by the federal regulators to turn their backs on potentially millions of people whose deposits are the foundation of the banking business. A clear descent against the intent of the law.

And if those changes weren’t bad enough, the banking regulators took it even further. The definition of affordable housing would be expanded in a manner that will not ensure bank activities are actually going to LMI people. The small business revenue threshold for CRA credit would be increased from $1 million to $2 million, and up to $10 million for family farms, diluting the emphasis on revitalizing low-income communities and lending to the smallest businesses. And small banks with assets of less than $500 million could opt out of these new exam requirements and instead keep their current CRA examinations, which do not include any community development financing requirements.

Based on the Federal Reserve’s research into the financial impact of CRA, mortgage and small business lending in some LMI neighborhoods could drop by 20% over five years. That would result in a loss of $105 billion in loans. There is a reason the Federal Reserve did not sign on to this proposal.

There is no doubt that these changes would diminish the effectiveness of a law that was desperately needed when it was enacted and which remains essential to ensure banks meet the credit needs of all communities where they take deposits, not just the wealthy ones.

The regulators violate cardinal principles of rulemaking in terms of both fulfilling their statutory responsibilities under CRA and not proposing a rule based on clear and transparent data analysis. The FDIC and OCC need to discard the notice of proposed rulemaking and instead work with the Federal Reserve Board and propose an interagency rule that will augment the progress achieved under CRA in terms of reinvesting in LMI communities, not halting or reversing this progress.

OpEd Examples:

Here is an example of a recent OpEd Jesse Van Tol did in the New York Times, and three from our members:

A Green Light for Banks to Start ‘Redlining’ Again

Bank merger calls for community benefits agreement

Your View: Law promotes homeownership in poorer Lehigh Valley neighborhoods. Why weaken it?

https://www.sfchronicle.com/opinion/openforum/article/Save-the-Community-Reinvestment-Act-a-path-to-14960588.php

 

 

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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