WASHINGTON, D.C. – (RealEstateRama) — The Office of the Comptroller of the Currency (OCC) released its Advance Notice of Proposed Rulemaking (ANPR) to seek public input on how the agency should update Community Reinvestment Act (CRA) procedures. A coalition of civil rights and consumer advocacy organizations has signaled to the OCC that any changes to the CRA must strengthen — not weaken — banks’ obligation to meet the needs of low-income communities and communities of color and that changes must result in expanded access to credit in historically redlined areas.
The CRA is a fair lending law designed to expand financial opportunity. The law requires banks to serve the credit needs in the communities where their businesses are located. The CRA has been a key driver in financial equity, helping to spur hundreds of billions of dollars of investment in underserved areas. The coalition is urging Comptroller Joseph Otting not to create a loophole for banks to exploit, such as a proposed one-size fits all, single performance number approach. This would let banks choose to serve some communities and exclude others and still get approved for complying with CRA. Banks could meet their CRA requirements by choosing the easiest, most lucrative activities that counted towards this single performance number test instead of actually serving the financial needs of their communities.
In conducting CRA evaluations, the OCC also provides a necessary check on unlawful discrimination in lending. However, this check was severely weakened by Otting’s predecessor, Acting Comptroller Keith Noreika, who eased criteria for evaluating bank performance in communities of color, even while the Federal Deposit Insurance Corporation and the Federal Reserve did not.
National civil rights and housing policy organizations released the following statements in response to today’s ANPR release:
“For 40 years, the Community Reinvestment Act has helped credit starved communities gain access to safe and responsible financial products. It is a critical tool in efforts to build economic parity for communities of color and is one of the most important laws for building wealth and revitalizing neighborhoods. The National Urban League calls on the OCC to enhance, expand, and fully enforce the CRA,” said Marc Morial, President and CEO, National Urban League.
“The Community Reinvestment Act is an important fair lending law created in response to redlining practices that are still too common in low-to-moderate income communities and neighborhoods of color. It will be a detriment to families and our nation if changes to the CRA fail to guarantee that banks are meeting the credit needs of people in the communities where they are located. The OCC must actively engage the civil rights community in this process to ensure no harm will be done to the people that need the CRA the most,” said Lisa Rice, President and CEO at the National Fair Housing Alliance.
“The Community Reinvestment Act has helped lower the barriers that prevent Latinos and other communities of color from accessing safe and affordable loans and mainstream financial services,” said Samantha Vargas Poppe, Director of UnidosUS’s Policy Analysis Center. “Still, we know the law can be made stronger for our communities and that the current political climate threatens the power of this law. We welcome the opportunity to work towards an improved, more effective law that offers opportunity to more Americans.”
“Low income communities and people of color should have fair access to home ownership as it is a direct link to help build generational wealth,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “The Community Reinvestment Act has been instrumental in ensuring that underserved communities are not being subjected to discriminatory lending practices. No changes should happen to the CRA without direct engagement from those communities and civil rights organizations.”
“The CRA is a product of the civil rights era and is integral to increasing access to safe and secure lending, investments, and banking services in underserved communities. We need the OCC to exercise sound judgement when considering changes to this important law and recognize that any updates to CRA must also include consensus with the civil rights community. A revitalized CRA applied broadly and rigorously throughout the financial industry can help achieve the objectives of empowerment and wealth building, especially in communities of color,” said Hilary O. Shelton, Director of the NAACP Washington Bureau and Senior Vice President for Policy and Advocacy.
“The CRA is an essential community development tool that has resulted in billions of dollars in investments. The OCC should engage with civil rights organizations; incorporate our recommendations; and not include any loopholes in changes to the CRA–doing so would be dangerous and reverse more than 40 years of hard-fought progress for low-income communities of communities of color,” said Seema Agnani, Executive Director, National Coalition for Asian Pacific American Community Development (National CAPACD).
“The Comptroller should work hand in hand with civil rights and housing policy organizations on any changes to the CRA to ensure he accounts for and understands the harsh realities of discrimination that still plague today’s financial marketplace. If the OCC loosens regulation standards or adopts a single performance number standard, then it will open the door for banks to pick and choose which communities they serve–leaving out the very communities that CRA was enacted to support,” said Mike Calhoun, President of the Center for Responsible Lending.