Passed by Congress as a response to redlining and lending discrimination, the Community Reinvestment Act (CRA) has delivered significant and targeted resources to encourage community development and place-based investment in communities forgotten or abandoned by the private market. Since CRA’s inception in 1977, banks have invested nearly $2 trillion into low and moderate income communities. However, a current proposal by the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) could significantly undermine CRA and its impact in our communities. Learn more below and take action by submitting a public comment before April 8, 2020.
Thanks to CRA, more banks are better at meeting the credit needs of low and moderate income neighborhoods. As one of the few mechanisms available to encourage and monitor lending to low- and moderate-income communities, businesses and individuals, CRA helps hold banks accountable to invest in the communities they serve. The law requires banks to provide loans, investments, and services to low- and moderate-income people and places in areas where they have branches. CRA incentivizes banks to focus on local needs and partnerships, including having bank branches accessible in low-income communities, creating affordable mortgages, providing loans to help small businesses operate and expand, and driving financing for affordable housing, economic development, and community services, such as the Low-Income Housing Tax Credit (LIHTC).
On December 12th, 2019, the OCC and FDIC issued a joint Notice of Public Rulemaking to amend CRA. The proposed changes could loosen CRA requirements on banks—significantly reducing the incentive for banks to meet the credit needs of every low-income community where they take deposits, resulting in significantly fewer loans, investments and services to low-and moderate-income communities most in need of more credit and capital. These proposed regulatory changes to CRA will harm community development and the investments made in the Twin Cities and beyond.
Public comment is critical in building the case against the proposed changes. MCCD will be submitting a comment, and encourage all of our members to comment as well. The number of comments really matter and your individualized comments can help provide crucial input! As community development organizations working to leverage resources for low and moderate income communities, MCCD members have considerable expertise to provide comments on these proposed changes to CRA. You can take action by submitting a comment letter urging the OCC and FDIC to discard the proposed rule and seek broader input from community development organizations on the ground when drafting any future changes. See below for sample talking points as well as MCCD’s letter, and feel free to reach out to MCCD policy staff with questions.
For more than forty years, CRA has fostered collaboration between lenders and community organizations, working together to make billions of dollars of loans and investments in underserved communities for affordable housing, small businesses, economic development, and community service facilities. The goal of CRA is to deliver financial products, money, and resources to people and places the economy has left behind. Prosperity for all communities is challenging and takes focus and innovation through CRA-related investments and beyond. CRA has a proven track record of promoting fairer and more equitable distribution of banking services in all of our neighborhoods, and our field has significant power to raise our collective voice end ensure CRA remains a strong tool in the hands of nonprofits and neighborhood leaders.
MCCD will continue to share information and resources on CRA reform as the process continues.
CRA talking points for MCCD members:
•Changes to the rules that govern bank compliance will have a major, long-term impact on the investments, loans, and services banks provide in lower-income and minority communities.
•Any CRA regulation should ensure banks, their employees, and their products are accountable to and connected to the needs of the entirety of their assessment areas.
•CRA changes should strengthen requirements on banks, be supported by the Federal Reserve, and should have broad stakeholder support, including from community development organizations, not just banks.
•Provide a positive example of how CRA has helped your organization serve the communities you work with/operate in.
•Focus on your reputation as experts and reliable community developers and the benefits from CRA you’ve seen in the communities your organization serves.
•The Ask: Do not move forward with implementing the proposed rule as is.