The Community Revitalization Act (CRA) is under attack and the efforts to change the regulation could have untold impacts organizations like yours that are dedicated to the expanding access to economic opportunity.
The CRA was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets.
For decades, entire neighborhoods were excluded from lending to buy homes and build small businesses. Those were poor and working-class neighborhoods where minorities and immigrants lived. That practice was called redlining. It prevented millions of people from building personal wealth through home ownership and entrepreneurship.
The law made a huge difference. A trillion dollars or more went to low- and moderate-income neighborhoods that were once excluded from the American Dream. But discrimination in lending is still a problem. We still need CRA, and neighborhoods still need lenders to live up to their obligations under the law.
What can you do?
Write to the OCC and FDIC and express your concerns about the proposed change here. Comments are due by March 9 at 11:59pm EST.
Inform our Colorado Congressional Delegation that we need to modernize the CRA, not relax it.
Below is some suggested language to include in your correspondence. You can find additional information at
[Your Organization] strongly opposes the proposed changes by the OCC and FDIC to the Community Reinvestment Act (CRA) regulations. These changes are deeply misconceived and would lessen the public accountability of banks to their communities by enacting unclear performance measures on CRA exams. The proposed changes would not accurately measure a bank’s responsiveness to our local needs. The OCC and FDIC changes would significantly reduce the number of loans, investments, and services to low- and moderate-communities (LMI) we serve.
OCC and FDIC proposed changes dramatically lessen CRA’s focus on LMI communities in contradiction to the intent of the law to address redlining in the communities we serve. The definition of affordable housing would be relaxed to include middle-income housing in high cost areas. In addition, the Notice of Proposed Rulemaking (NPRM) would count rental housing as affordable if lower-income people could afford to pay the rent without verifying that lower-income people would be tenants.
The NPRM would add financing large infrastructure such as bridges as a CRA eligible activity. Even financing “athletic” stadiums in Opportunity Zones would be an eligible activity. The NPRM would define small businesses and farms as having higher revenues, increasing the limit from $1 million to $2 million for small businesses and as high as $10 million for family farms.
The OCC and FDIC propose an evaluation system that would further inflate ratings while decreasing the responsiveness of banks to our community needs. The agencies propose a one ratio measure that would consist of the dollar amount of CRA activities divided by deposits. This ratio measure would likely encourage banks to find the largest and easiest deals anywhere in the country as opposed to focusing on local needs. Since banks could fail in one half of the areas on their exams and still pass under the proposal, the likelihood of banks seeking large and easy deals anywhere would increase. Also, the proposal would relax requirements that banks serve areas where they have branches first before they can seek deals elsewhere.
The agencies also propose to allow banks that receive Outstanding ratings to be subject to exams every five years instead of the current two to three years. This would result in banks not making much effort in the early years of an exam cycle to serve their communities.
Instead of weakening CRA, the OCC and FDIC must enact reforms that increase bank activity in our underserved neighborhoods. The agencies do not address persistent racial disparities in lending by strengthening the fair lending reviews on CRA exams or adding an examination of bank activity to communities of color in CRA exams. At the very least, the agencies could add a category on CRA exams of underserved census tracts, which would likely include a high number of communities of color. The agencies also require banks to collect more data on consumer lending and community development activities, but do not require banks to publicly release this data on a county or census tract level. Finally, the agencies do not require mandatory inclusion on exams of bank mortgage company affiliates, many of whom engaged in abusive lending during the financial crisis.
This deeply flawed proposal would result in less lending, investing and services for communities that were the focus of Congressional passage of CRA in 1977. This backtracking will violate the agencies’ obligation under the statute to ensure that banks are continually serving community needs. The FDIC and OCC need to discard the NPRM, and instead work with the Federal Reserve Board and propose an interagency rule that will augment the progress achieved under CRA instead of reversing it.