This article was written by Clayton Vye, ULC’s Communications Intern

Members of Urban Land Conservancy (ULC) attended the National Community Reinvestment Coalition’s (NCRC) Just Economy Conference in Washington, DC from March 10th to the 13th. Aaron Miripol and Christi Smith, respectively ULC’s President & CEO and VP of Strategy and Communications, represented ULC at the conference.

NCRC was formed in 1990 to increase the flow of private capital into traditionally underserved communities. Over 600 community-focused organizations comprise NCRC, providing access to banking services, affordable housing, jobs and entrepreneurship opportunities. NCRC also hosts the annual Just Economy Conference; a national event for community, policy, government and business leaders to convene, share best practices and discuss innovative ideas toward equity in the banking and housing sectors. You can learn more about the Conference’s agenda and featured speakers on their website.­­­

A central topic during the Conference was discriminatory lending practices in the banking and housing sectors. Redlining, the infamous practice used to avoid investment in areas based on community demographics, was a prevalent form of discrimination during the early- to mid-20th century. Minority groups were systematically denied access to credit, contributing to segregation and subsequent urban disinvestment when White families fled urban neighborhoods for the suburbs. The practice of legal redlining ended with the passage of the Fair Housing Act of 1968, but urban disinvestment and the deterioration of American inner-cities continued. Part of the problem was that the Fair Housing Act didn’t force financial institutions to lend into the communities they served.

The Community Reinvestment Act (CRA), signed into law in 1977, was designed to remedy this by strongly encouraging banks to serve the credit needs of communities where they receive deposits. The law works as follows: CRA directs bank regulatory agencies to evaluate the extent to which each bank complies with CRA. The three regulatory agencies are the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve System. These agencies use performance criteria to analyze banks on CRA performance in a variety of assessment areas. Banks are then assigned a rating ranging from “outstanding” to “substantial noncompliance”. CRA ratings are taken into account when a bank seeks to merge or acquire another lending institution. Even the opening of a new bank branch is scrutinized if the parent institution has a poor CRA showing. The CRA rating has proven to be a powerful tool, often encouraging banks to lend in lower-income neighborhoods.

CRA has been in place for nearly 45 years, and proven extremely effective. NCRC estimates the law has sparked $2 trillion in loans since 1996. However, under the current administration, the CRA is under threat. In November of 2018, the Office of Comptroller of the Currency (OCC) issued an advance notice of proposed rulemaking (ANPR), asking for public comment on ways to modernize CRA.

While NCRC agrees that the CRA is past due for an update, “the concern is that the OCC will issue rules that may be even more flexible on banks as far as what they have to do in compliance with CRA,” explained Miripol.

As a firm supporter of the CRA and NCRC, ULC provided public comment on the OCC’s ANPR late last year. ULC warned that if the OCC proceeds to relax the enforcement of the CRA, low- and moderate-income neighborhoods could lose up to $105 billion in home and small business lending over a five-year period, according to a report published by NCRC. ULC is also concerned about an OCC proposal to rollout a one-ratio revision to the CRA exam. The one-ratio would reflect a dollar amount of a bank’s CRA activities, divided by that bank’s assets. Supporters of this proposal argue that this would reflect a bank’s CRA effort compared to their size, simplifying the grading process. However, a single ratio cannot tell a CRA examiner how responsive a bank is to particular service areas. The one-ratio idea will also diminish community input on how a bank is performing.

NCRC is taking the reform of the CRA seriously. They created a hashtag campaign called #TreasureCRA and authored five principals that should be included in a modernized the CRA.

  1. Geography must remain the focus for CRA exams of banks.
  2. New language explicitly stating the law’s obligation to fairly serve all races and ethnicities.
  3. Keeping all lenders accountable, not just traditional banks. The financial landscape has changed since 1977 and the majority of mortgage lenders shouldn’t be able to skirt CRA requirements.
  4. Clearly defined grading parameters that emphasize different assessment areas. Lending, branches, fair lending performance, and responsible loan products for working class families are all assessment areas that deserve equal weight in a CRA exam. NCRC does not support a one-ratio grading scale.
  5. Taking a stand against financial institutions who fail CRA exams. These banks should not be allowed to merge with other institutions with better CRA scores to improve their overall rating.

In addition to attending various keynote presentations, NCRC Conference attendees had the chance to meet with their State representatives for the final day of the Conference.

“I gained a much greater understanding of how the Community Reinvestment Act directly supports ULC’s real estate work, specifically as we continue building relationships with the banking industry,” said Smith of her visit to Capitol Hill. “Participating in the NCRC’s Hill Day was rewarding as we were able to provide specific examples of how the CRA has created billions of dollars of investment throughout Colorado, something our Senators and House Representatives strongly connected with.”

ULC spent the majority of the day meeting with House Representatives Joseph D. Neguse, Jason Crow, Scott Tipton and Ed Perlmutter along with Senators Cory Gardener and Michael Bennett during NCRC’s Hill Day. Although the severity of redlining in Colorado has decreased in recent years, ending the practice of discriminatory lending once and for all is an immense challenge.

“Colorado’s redlining practices were very much an issue going back 30 or 40 years ago. Today, it’s not as serious as it used to be,” Miripol explained.

Take the Five Points neighborhood for example. The area used to be one of the most aggressively redlined districts in Denver. Today, it has become one of the most expensive land tracts in the City due to its historic buildings and proximity to downtown.

“Banks are not going to have an issue lending in Five Points. They may have an issue lending to a middle-income person of color. All things being aside, race is still a factor,” concluded Miripol.

Monique Lovato, CEO & Executive Director of Mi Casa Resource Center, also attended the NCRC conference. Mi Casa is a business and career development resource operating out of Denver. Mi Casa has a strong track record of advancing the economic opportunities of underserved individuals and their families.

Inspired by the NCRC’s Just Economy Conference, Lovato convened 20 community-based organizations to Mi Casa to discuss strategies for increasing advocacy around the issue of opportunity zones to spur action in local government. One of Lovato’s key takeaways from the Conference was how to better craft a request for proposal (RFP). An RFP is a project proposal document for projects requiring technical or specialized expertise. Based on the CRA knowledge Lovato gained at the Conference, she plans to strengthen a pre-exiting proposal Mi Casa was planning on distributing to various financial institutions later this year.

As practitioners who often work with banking institutions, ULC will continue to support the CRA and NCRC. ULC would like to thank the Colorado Congress members for taking the time from their busy schedules to meet with us and discuss these important issues. ULC would also like to thank NCRC for putting together another great Conference. We are already looking forward to next year!

Aaron Miripol is a recent addition to NCRC’s board, formerly serving as a PLACE Board Member. PLACE, or Practitioners Leveraging Assets for Community Enhancement, was a group of over 180 community development practitioners across the United States. PLACE was incorporated into NCRC in January 2019.