When the Office of the Comptroller of the Currency (OCC) handed City National Bank (CNB) a “Needs to Improve” rating under the Community Reinvestment Act (CRA) earlier this year, it stood as an uncommon rebuke in the world of banking. 

Roughly 96 percent of banks receive either an “Outstanding” or “Satisfactory” rating in their CRA evaluations, conducted every two to three years. The worst ratings a bank can receive are “Needs to Improve” or “Substantial Non-Compliance.”

The CRA, a landmark federal law designed to combat the discriminatory practice of redlining, mandates that banks reinvest in the neighborhoods where they collect deposits, especially in low- and moderate-income areas. The CRA  incentivizes banks to reinvest in communities by empowering bank regulators to evaluate bank performance and assign public ratings. But CRA ratings are notoriously subject to grade inflation. So, when a bank fails to meet even the minimal standards, it’s a glaring red flag.

In May, Rise Economy CEO, Paulina Gonzalez-Brito, responded to the OCC’s rating of CNB by saying, “An ‘F’ is the only appropriate grade for a bank that was subject to the largest redlining settlement in U.S. history.” 

Yet, the impact of CNB’s conduct goes beyond a failing CRA grade. Earlier this year, it was the subject of the largest redlining settlement in United States Department of Justice history. And disparities in CNB’s lending practices continue in other parts of the state and in recent years, according to Rise Economy analysis.  CNB’s discriminatory lending practices, coupled with its parent company, the Royal Bank of Canada (RBC), financing of fossil fuels, make it an agent of both economic and environmental harm to BIPOC communities.

RBC is one of the largest financiers of fossil fuels globally. In California, RBC  has financed companies responsible for some of the state’s worst pollution, particularly in Black, Indigenous, and People of Color (BIPOC) neighborhoods. These companies operate over 24,000 oil wells and 63 refineries, pumping out more than 33 million metric tons of greenhouse gasses in 2021 alone. 

“The CRA has always been a powerful tool for holding banks accountable, but it’s not enough for banks to merely avoid failing grades,” Kevin Stein, Chief of Legal and Strategy. “They must actively invest in the future of the communities they serve, providing access to affordable loans, supporting community development, and divesting from industries that harm their most vulnerable customers.”

Currently, Rise Economy has pushed for a California-specific CRA that would strongly incentivize investments in climate resiliency. Beyond that, Rise Economy is set to launch a bold accountability campaign calling on RBC and CNB to phase out financing for fossil fuels, address the environmental harm caused by their investments and end discriminatory lending practices.