Protect the Community Reinvestment Act
The Community Reinvestment Act (CRA) of 1977 is a landmark civil rights bill that aims to prevent redlining and ensure investment in low-income communities and communities of color. On December 12, 2019, the FDIC (Federal Deposit Insurance Corporation) and OCC (Office for the Comptroller of the Currency) announced proposed changes that would weaken the CRA. The original 60-day comment period, which began on January 9, 2020, was extended until April 8, 2020.
PUMP envisions a region with diverse, inclusive, affordable neighborhoods and communities, as well as individual, community, and financial support for education, employment, and entrepreneurship. The CRA has historically been an essential tool in advancing these ideals by protecting communities and regulating banks. That’s why we are joining local community leaders, including Mayor Peduto, Pittsburgh City Council, the Pittsburgh Community Reinvestment Group (PCRG), in opposing these harmful changes to the CRA. There is also a national campaign to stop these changes, #TreasureCRA, led by the National Community Reinvestment Coalition (NCRC).
The CRA requires that banks “serve the convenience and needs of the communities in which they are chartered to do business,” including by ending discriminatory practices that harm low- and moderate- income (LMI) communities. The CRA has a long history of legislative and regulatory changes. Throughout the 1990s, these changes bolstered the CRA, expanding its scope and requiring more regulation. The CRA has also received criticism over the years for its effectiveness. Some civil rights advocates “argue that the act is out of touch, given the sweeping transformations in the financial world” (CityLab). The OCC, FDIC, and the Federal Reserve Board are all responsible for enforcement of the CRA, suing “established assessment criteria, which have evolved over time, to determine how well banks are responding to community credit needs” (The Daily Beast).
The FDIC and OCC’s proposal:
The stated purpose of the proposed changes is to “encourage banks to provide billions more each year in Community Reinvestment Act-qualified lending, investment, and services by modernizing the Community Reinvestment Act (CRA) regulations.” But by lessening many of the regulatory burdens on banks, the changes could actually result in a loss of billions of dollars in lending to low- and moderate-income communities. NCRC forecasts that Pennsylvania could see a reduction of $1.3 billion to $2.6 billion over five years in mortgage and small business lending in low- to moderate-income neighborhoods.
NCRC breaks down some of the concerns in this fact sheet. Together, the numerous changes would make it easier for banks to neglect low- and moderate-income communities.
The Community Reinvestment Act in its current form is not perfect. We believe that it does need reform – but it needs reform that would strengthen it, not weaken it, as the FDIC and OCC proposal would. PUMP supports NCRC and the Pittsburgh Community Reinvestment Group’s calls for a stronger CRA.
PCRG has proposed four principles that should be honored in any reforms to modernize CRA:
- Don’t strip ‘community’ out of a law that’s supposed to strengthen communities
- Protect communities of color with explicit language against racial discrimination
- Keep all lenders accountable
- Set a clearly-defined CRA grading system
Help protect the Community Reinvestment Act and advocate for positive reform:
- Submit a comment to the FDIC and OCC by April 8, 2020 (here)
- Spread the word to your network
Join the national #TreasureCRA campaign for comment templates and more to get started.