ANHD Statement on Proposed Changes to Community Reinvestment Act

The Trump administration is at it again, systematically dismantling long-standing civil rights laws, this time taking aim at a little-known law with a very big impact. The Community Reinvestment Act (CRA) requires banks to lend and provide services equitably and support community development in the communities where they do business. It was one of a series of civil rights acts passed in the 1960s and 70s in response to systemic redlining, disinvestment, and discriminatory policies and practices, including those that locked out people and neighborhoods of color from banking and homeownership. The CRA is now under attack.

The term “redlining” refers to the historic practice of refusing to make or insure mortgages in “risky” neighborhoods, which were defined as low-income neighborhoods or neighborhoods with large concentrations of people of color. It is often used to describe persistent discrimination in lending that continues to this day.

Yesterday, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) released a set of proposed rules for the CRA that threaten the very heart of the law and do nothing to combat redlining or increase responsible, responsive banking. It was released without the support of the Federal Reserve Board and without considering the 1,000+ comments that opposed much of what is in the proposal.

1. The proposal values dollars over impact, quantity over quality, thus incentivizing larger deals over smaller, more impactful ones. It creates arbitrary target goals before ever considering community needs.
2. The proposal greatly expands what counts for CRA credit with activities that benefit larger businesses and higher-income families, and activities that go way beyond the original intent of the law. At the same time, it minimizes or eliminates the emphasis on meaningful community investment like bank branches, banking products, impactful volunteer hours, and quality jobs.
3. The proposal greatly expands where banks can get CRA credit, allowing for investment in areas outside of local assessment areas, which minimizes focusing on local community needs and partnerships. In many of these areas, investment is allowed without evaluating the impact of those dollars.

Meanwhile, we see almost none of our priorities reflected in their rules. ANHD and its members are dismayed and angered to see that almost of none of our priorities are included in the proposal. We cannot support a CRA that doesn’t reflect our priorities:

• Banks should be evaluated on the quantity, quality, and impact of their activities in order to motivate high quality, responsive activities that lift historically redlined people out of poverty and help reduce wealth and income disparities. The CRA should penalize banks that finance activities that cause displacement and harm.  
• Community input and community needs must be at the heart of the CRA, both at the time of exams and at the times when banks apply to merge or open branches. 
• The CRA must maintain the place-based commitment banks have to local communities. Keep assessment areas where banks have branches and add assessment areas where banks do not have branches but are making significant numbers of loans and/or receiving deposits. 

ANHD and our members are mobilized to fight back against the dismantling of the CRA. Learn more about our CRA Advocacy and stay tuned on how to comment and fight back. The comment period is only 60 days, including the holidays.