Five Smart Improvements to the Community Reinvestment Act
42 Organizations Suggest Improvements to the Community Reinvestment Act
Improvements Would Help Strengthen Investment in Communities
San Francisco—Today, 42 community-based organizations submitted recommendations to bank regulators,including the FDIC, Office of the Comptroller of the Currency, and Federal Reserve, to dramatically strengthen the Community Reinvestment Act (CRA) and make banks more accountable to communities.
“Once again, we are seeing communities being left behind by harmful bank practices and decreasing reinvestment,” explains Kevin Stein, associate director of the California Reinvestment Coalition. “In 2016,it’s problems like branch closures, banks financing harmful activities like payday lenders, potential “double dipping” by banks seeking CRA credit for activities they agreed to do as part of settlements, rural communities being left out, and banks not developing strong CRA plans. These five recommendations would strengthen communities and help regulators better fulfill the original goals of the CRA- for banks to meet the credit needs of all communities, including low and moderate income communities.”
The five recommendations were provided by the organizations in a letter as part of the public comment process as bank regulators consider making changes to the CRA.
CRA Recommended Improvements:
1) Regulators should award negative CRA credit for banks involved in practices that worsen their customer’s financial health (like excessive reliance on overdraft fee revenue) or for lending and investment practices that lead to displacement.
2) Regulators should focus greater scrutiny on bank reinvestment (or lack thereof) in rural areas to incentivize stronger lending and investment in these areas.
3) Using input from the communities where they work, banks should develop transparent, meaningful CRA plans with clear benchmarks. (See examples here)
4) The retail services test should be strengthened so that low to moderate income consumers aren’t left behind, especially as banks close branches in their communities and try to force people to mobile banking instead.
5) Regulators should ensure banks are not engaged in “Double Dipping” by claiming CRA credit for are investment activity a bank is doing as a result of a settlement for wrongdoing (like mortgage settlements).
The Organizations signing onto this letter are:
Advocates for Neighbors
Albany Community Land Trust
Asian Pacific Policy & Planning Council (A3PCON)
Bay Area Development Company
California Coalition for Rural Housing
California Reinvestment Coalition
California Resources and Training (CARAT)
CAMEO – California Association for Micro Enterprise Opportunity
Capital Region CRA Coalition
CASA of Oregon
CDC Small Business Finance
Center for Sustainable Neighborhoods
Community Action Agency of Butte County, Inc.
Community Action Partnership
Community Financial Resources
Community Housing Opportunities Corporation
East Bay Housing Organizations (EBHO)
East Los Angeles Community Corporation
Empire Justice Center
Housing and Economic Rights Advocates
Jewish Community Action
MidPen Housing Corp.
Mutual Housing California
Neighborhood Housing Services of Greater Cleveland
Northbay Family Homes
Northern Circle Indian Housing Authority
Ohio Fair Lending
One Million Moms Off Welfare by 2025
Public Interest Law Firm
Rural Community Assistance Corporation (RCAC)
Sacramento Housing Alliance
STAND Affordable Housing
Toledo Fair Housing Center
Yolo Mutual Housing Association