Community Advocates Tell Bank Regulators to Put People Over Profits

January 21, 2020

Dozens March Against the Trump Administration’s Proposed Changes to the Community Reinvestment Act

New York, NY – Dozens of community members and elected officials came out to tell bank regulators they want regulations - like a strong Community Reinvestment Act (CRA) - that will hold banks accountable to invest equitably and responsibly in their communities. Speakers made it clear that they oppose any efforts to make it easier for banks to abandon low-income communities and communities of color vulnerable to gentrification and displacement, and that banks should not get credit for developments and high-cost or predatory loans that harm or displace the people of their communities.

The CRA is one of the major civil rights laws passed in response to discriminatory policies and practices that locked people of color out of banking, credit, housing, employment, and education. It requires banks to lend and provide services equitably and support community development in the communities where they do business. But now, that law is under attack.

The Office of the Comptroller of the Currency (OCC) and the FDIC released a set of proposed rules for the CRA that will result in fewer first time homebuyers; a reduction in the development and preservation of critically needed deeply and permanently affordable housing; decreased consumer access to bank branches and affordable banking products; fewer small loans to small businesses that serve local communities and hire local residents; and so much more.

“We knew the CRA proposal would be bad, but we never imagined it would be this bad. The proposal from the OCC and FDIC is a total dismantling of the CRA as we know it,” said Jaime Weisberg, Senior Campaign Analyst for the Association for Neighborhood and Housing Development. “Their one-ratio approach will lead to less investment in lower-income communities and communities of color, more redlining, and fewer impactful investments overall, including for deeply affordable housing and quality jobs. Contrary to their stated goals, the proposal is more complex, less transparent, and less rigorous than what we have today, and the consequences will be disastrous. We call on them to abandon this proposal and go back to the table with the Federal Reserve Board.”

“The Community Reinvestment Act is a vital weapon to combat the shameful bank practice of red-lining and instead seeks to ensure that low- and moderate-income families have access to affordable loans and mortgages,” said U.S. Senate Minority Leader Charles E. Schumer. “This effort, led by Trump regulators, to water-down these profoundly important requirements must be called out and roundly rejected. That is why Senate Democrats, working with community and housing organizations, will do whatever we can to see that the flaws of this proposal are brought to light and never enacted.”

“It’s no secret that the Trump Administration has attacked longstanding civil rights law. Now, they are taking aim at the Community Reinvestment Act and proposing changes that would gut fundamental discrimination protections. The Community Reinvestment Act is one of the most important anti-discrimination laws we have. It prevents banks from redlining and excluding low-income and minority communities, and also puts an affirmative obligation on banks to lend to their local communities. I’m committed to fighting this deeply harmful proposal and ensuring that banks are held accountable and continue to lend to local and underserved communities,” said U.S. Congresswoman Carolyn B. Maloney.

“The CRA has helped channel billions of dollars each year in reinvestment to our New York City communities. These resources helped to construct and rehabilitate affordable housing, start community redevelopment projects, and offer affordable and accessible credit to neighborhood small businesses. President Trump and the OCC are proposing gutting the CRA, enabling banks to escape their investment responsibilities. Today, we are speaking with one collective voice to say we will not let that happen,” said U.S. Congresswoman Nydia M. Velázquez.

“Ensuring that Community Reinvestment Act modernization stays true to the law’s civil rights roots has been a top priority of mine this congress,” said U.S. Congressman Gregory Meeks. “In the past year, I held two hearings on CRA, in the House Financial Services Subcommittee on Consumer Protection and Financial Institutions, which I chair. I have also written multiple letters to the regulators and helped lead a tour of my district in Queens for OCC Comptroller Otting to emphasize the critical importance of this law to communities like the ones I represent. I was terribly disappointed to learn that Comptroller Otting and FDIC Chair McWilliams pulled the plug on the inter-agency working group to modernize CRA, and insisted on plowing ahead with an approach that was widely panned for being inconsistent with the original civil rights intent of CRA, and breaking the link between banks’ community reinvestment activities and the low- and moderate-income communities – and in particular communities of color – for whom the law was meant to bring redress for decades of systemic discrimination. I remain focused on this issue, to ensure that we achieve the best outcome for the people of Queens, and vulnerable communities across the country.”

New York State Senator James Sanders Jr. said, "These possible changes to the CRA would be devastating to communities like Southeast Queens, which was the epicenter of the foreclosure crisis from 2008-2013. It would hinder new homeownership, a central part of building economic development, communities where residents own homes and businesses are strengthened by that investment. It promotes deep roots and generational growth. We want to have that pride of ownership in this district and we need the solid foundation of the CRA to help us achieve our mission."

“The Community Reinvestment Act was enacted to address longstanding discrimination, including redlining and lack of access to credit in underserved communities for low- and moderate-income households,” said New York State Department of Financial Services Superintendent Linda A. Lacewell. “Federal regulators must preserve these critical protections. The Department will continue to uphold and enforce New York’s CRA regardless of Washington’s actions. We commend ANHD for speaking out for our communities that would otherwise be harmed by misguided federal actions.”

“Having a bank account is an essential part of financial stability but sadly one in three households in New York City is un- or underbanked,” said NYC Department of Consumer and Worker Protection Commissioner Lorelei Salas. “Worse — these households are concentrated in predominantly minority and/or low-income neighborhoods. We hope banks and regulators alike hear the voices of those gathered today and in communities across the country and do what is right — meet the needs of our communities who need it the most. We also encourage New Yorkers to make an appointment at one of our Financial Empowerment Centers where a counselor can help you find the right account and work together towards your financial goals.”

“The Community Reinvestment Act represents a hard won victory for people across the country who fought to make financial institutions that benefit from communities invest in these communities,” said New York City Department of Housing Preservation & Development Commissioner Louise Carroll. “Now, decades later, we must fight once again to protect this critical tool that brings much needed investment to affordable housing and community development.”

Community advocates told stories of how the CRA has benefited the communities they serve with loans, investments, bank branches, and services. They also spoke to why the CRA needs to be strengthened – banking deserts in the Bronx, landlords receiving big loans from banks and then displacing long-time tenants, and a lack of lending to small businesses. Advocates explained why a strong CRA was so important to their communities.

“We are deeply concerned about the proposed draconian CRA rule because of the long-lasting negative impact it will have in our communities,” said Yoselin Genao Estrella, Executive Director of Neighborhood Housing Services of Queens CDC, Inc. “Although it’s not perfect, the CRA has been the bedrock for bringing resources to underserved neighborhoods and for making sure that the American dream of homeownership can become a reality – especially in communities of color. It’s time to strengthen the CRA instead of watering it down as it will take us several steps back on the progress that we have made, and our communities deserve nothing less.”

“Over decades, CRA has incentivized banks to invest in entrepreneurs in low-income communities. Bank support is critical to the work of community development organizations that provide lending and development services dedicated to building the capacity, financial literacy and capital readiness of community businesses. The proposed CRA changes will undermine equitable access to capital and reduce programs that are dedicated to building local enterprise. When diverse small businesses are left out, local economies suffer,” said Nancy Carin, Executive Director of Business Outreach Center Network and BOC Capital Corp. CDFI.

“The proposed regulation will divert resources away from communities like Jamaica. It greatly expands how and where banks can get CRA credit, making it less likely that financial assistance will flow to communities that need it the most,” said Blondel Pinnock, Chief Operating Officer of Greater Jamaica Development Corporation. “The proposed regulation will also starve small businesses of credit they need to grow by raising the maximum size of a small business loan from $1 million to $2 million. In Jamaica, Queens, many small businesses that need financing would not be able to accommodate a loan of $2 million. Because banks will probably go after big projects to fulfill their CRA obligations as quickly as possible, those small businesses – the bedrock of Jamaica’s economy – are going to be left out.”

"CRA has made so much good happen in East New York and Cypress Hills – new affordable housing, mortgages for low income, first time home buyers and low-cost bank accounts – but we need more investment, not less.  Our community calls upon the federal government to go back to the drawing board and strengthen the CRA, boost lending in our neighborhoods and protect our civil rights," said Harold Green, chair of East Brooklyn Reinvestment Committee and President of Cypress Hills Local Development Corporation Board of Directors.

“At WHEDco, we have long valued the post-civil rights Community Reinvestment Act (CRA) legislation for being instrumental in helping to minimize the discriminatory financial practices that have long dashed hopes of financial security for too many in the Bronx,” said Davon Russell, President of WHEDco. “In a recent survey of over 400 community members in the South Bronx, we found that nearly 25% of respondents did not have a bank account, and over 40% had $0 saved. For these reasons and more, we had hoped for a CRA reform that would make things better for the many hard-working New Yorkers we serve, not worse. We stand with the thousands of workers and entrepreneurs who keep our communities strong in demanding better financial access, more bank branches, more affordable mortgages and favorable investment in affordable housing development to stabilize and build the futures of Bronx children and families, Bronx businesses, and the Bronx economy.”

“In the Bronx, the borough with the least branches and nearly 1.5 million residents, on a daily basis people have to plan their trip to the bank or simply accept the high fees paid on alternative financial services. Too often, too, their local bank will charge high fees or penalties,” said Jumelia Abrahamson, Director of the Northwest Bronx Resource Center at the University Neighborhood Housing Program (UNHP). “When household income is already low and rents are high, one costly transaction or any other barrier to access affordable banking products can be a permanent setback for families. Weakening the CRA would show that our regulators value banks and large developers, not people. Banks have a responsibility to serve low- and moderate-income neighborhoods and not sit back and allow for wealth to get extracted from our community. We gather today to shame the OCC and shame the FDIC for putting out this harmful proposal that would dismantle the CRA!”

"The Community Reinvestment Act has been an important tool for low- and moderate-income communities to attract the investment and support they deserve from our nation's financial institutions. The current proposal would neuter its effectiveness and set us on a course that would further exacerbate our country's growing inequality," said Michelle de la Uz, Executive Director of the Fifth Avenue Committee.

“The Community Reinvestment Act is critical to affordable housing investment and its future is at risk. The legacy of redlining is still visible in low-income neighborhoods across the country. With 1 million rent burdened households and 60,000 homeless individuals in New York City, we should be proposing policies to strengthen not weaken requirements for financial institutions to invest where it’s needed most,” said Jessica Facciponti, Director of Policy and Programs at New York Housing Conference.

Community members called for the OCC and FDIC to abandon their harmful proposal – which will have a huge detrimental impact on New York’s low-income communities and communities of color – and go back to the drawing board with the Federal Reserve Bank. They also encouraged people to make their voices heard by submitting comments to the bank regulators before the March 9th deadline laying out why a strong CRA is critical to the vitality of their communities and called for an extension of the comment period to 120 days or more.

“The Community Reinvestment Act is a key civil rights law that keeps banks accountable to support affordable mortgages, banking products, and housing,” said Judi Kende, Vice President and New York Market Leader of Enterprise Community Partners. “Enterprise stands with community advocates in their fight to preserve the original impact and intent of the law.”

“New York is in the midst of a homelessness and affordable housing crisis of epic proportions and the CRA has been a crucial tool in creating the only solutions: supportive and affordable housing. The administration’s proposed changes to CRA would severely limit private investment in these cost-effective, community-improving solutions … the timing could not be worse,” said Laura Mascuch, Executive Director of Supportive Housing Network of New York.

“Bank CRA investments help CDFIs finance important projects in formerly redlined communities. They help us launch minority and women-owned businesses, finance community development projects, and fund affordable housing projects. The CRA is a vital economic development tool, helping us halt the cycle of disinvestment that has plagued these communities for decades. The proposed changes to the CRA will suppress our ability to affect change here, and undo years’ worth of progress we’ve already made in these communities,” said Linda MacFarlane, Chair of the Board for the New York State CDFI Coalition.


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