More than 100 national and local civil rights, fair lending and consumer rights organizations have urged the
To read the joint comment letter signed by over 100 organizations, visit: https://ncrc.org/over-100-groups-call-on-federal-reserve-to-strengthen-cra/
To read detailed comments submitted by NCRC,
To read the comment letter urging the
The comments, submitted in response to the
Groups from across the country also urged the
“The Community Reinvestment Act, from its inception, was intended to address racial bias and systemic inequities that continue to exist today,” said
“Financial institutions must become pro-active, year-round partners and serve all segments of the communities where they conduct business,” said
“While the CRA has encouraged significant community investment, the law has fallen short in serving the credit needs of communities of color and in rectifying mortgage and small business lending gaps. We are encouraged by the Fed's focus on racial equity, fair lending, and ensuring that CRA credit is focused on meeting community needs. We urge the Fed to ensure that new rules live up to the law's mission, including addressing the destructive legacy of redlining and ongoing systemic inequities,” said
“The failure of the financial services industry to serve the needs of all consumers is a key driver of the racial wealth gap,” said
“The ongoing economic crisis spurred by COVID-19 underscores the need to further strengthen the Community Reinvestment Act to ensure that low- to moderate-income communities and neighborhoods of color are not left out of the recovery, but are able to emerge stronger and more resilient,” said
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Docket Number R-1723 and RIN Number 7100-AF94
To Whom it May Concern:
The undersigned organizations support the views of this letter. We work daily in promoting reinvestment and fair lending in underserved communities across the country.
Strengthening CRA Is A Critical Component Of A Just Recovery
Since the start of the pandemic, the number of Black business owners dropped by 440,000, or 41%, compared to just a 17% decline in white small business owners. Discrimination in lending contributes significantly to racial disparities in small business survival rates. An NCRC investigation found that
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.
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. In addition, a point scale that can reveal more distinctions in performance should supplement the overall ratings.
The Federal Reserve Proposal Should Be Strengthened To Increase Lending To People 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, 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).
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. Because redlining is a local phenomenon, banks, including branchless banks or those that have online and branch operations, must have local assessment areas for evaluating their performance.
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 communities, 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 Better Target Communities Of Color
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.
We are appreciative of the direction the Fed has embarked on its ANPR, but caution that the Fed 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.
Opportunity Finance Network
Small Business Majority
Build Healthy Places Network
Grounded Solutions Network
American Muslim Health Professionals
Housing Action Illinois
Universal Housing Solutions CDC
Massachusetts Communities Action Network
Housing Options & Planning Enterprises, Inc.
R.A.A. – Ready, Aim, Advocate
The Collaborative of NC
New Jersey Citizen Action
Southwest Neighborhood Housing Services
Fair Finance Watch
Neighborhood Housing Services of Queens CDC
Homes on the Hill, CDC
Perfecting Saints Heart to Heart Ministries, INC
Lower Marshall-Shadeland Development Initaitive
Pennsylvania Home Lending Collaborative, INC
Green Homeowners United
MKE United – Housing Committee
Safe & Sound
Wisconsin Faith Voices for Justice