Sponsored by the California Reinvestment Coalition, the California Community Reinvestment Act  (SB1176) establishes a framework for evaluating the performance of financial institutions in meeting the needs of their communities.

  Today, Sen. Monique Limón (D-Santa Barbara) introduced the California Community Reinvestment Act (Senate Bill 1176), landmark legislation that would increase lending and community development activity by banks and other financial institutions to low- to moderate-income communities and communities of color in California. This bill would establish a framework for evaluating the performance of state-regulated financial institutions in meeting the financial services needs of their communities.

The California CRA expands upon the federal CRA by establishing a similar state framework for banks, credit unions, mortgage lenders, and money transmitters that hold consumer funds. Moreover, the bill aims to protect Californians from discrimination and divestment from state-regulated financial institutions by establishing an explicit consideration of race and ethnicity in the performance evaluation of these institutions, which the federal CRA currently lacks.

“The concept of equity has rightfully been a focus of policymakers in recent years. In addition to policies around health, the workplace, climate, education, and many others, it is time for California to pursue equity in the financial services space,” Sen. Limón said. “I am introducing legislation to establish an obligation that our state-regulated financial institutions meet the needs of underserved communities and to create a framework that provides a public process for evaluating how these institutions are living up to that obligation. The state’s supervision of financial institutions cannot focus only on safety and soundness, but must also consider the needs of all Californians, including people of all racial and ethnic groups, people with low or moderate incomes, and people living in rural areas.”

“For decades, Black, Indigenous, and People of Color (BIPOC) communities have been left behind by harmful financial practices and decreasing reinvestment. These same communities have also been unfairly excluded from establishing generational wealth due to institutionalized racism in the form of redlining,” said CRC Executive Director Paulina Gonzalez-Brito. “This legislation is a significant step toward ensuring that all Californians, especially those from historically marginalized communities, have access to fair lending options.”

The federal Community Reinvestment Act was passed by Congress in 1977 to combat the practice of redlining. The CRA imposes an obligation on banks to reinvest in communities where they take deposits. The CRA requires federal regulators to assess how well each bank fulfills its obligations to these communities, including soliciting public input on banks’ CRA performance. This information is used in evaluating applications for approval of bank mergers, charters, acquisitions, branch openings, and deposit facilities.

“Over the last decade, we’ve seen rampant bank consolidation, a plethora of branch closures, widening racial inequities in mortgage lending,  exclusion of rural and indigenous communities, and an increase in anemic CRA plans. This bill establishing a CRA for California would address not only blind spots in the federal CRA but also force banks and other financial institutions to better meet the credit needs of all California communities,” said Sharon Kinlaw, CRC Board Chair and Executive Director of the Fair Housing Council of the San Fernando Valley. 

The California CRA is authored by Sen. Limón. The bill is sponsored by the California Reinvestment Coalition. 




Monique Limón represents the 19th Senate District, which includes Santa Barbara, Ventura, Goleta, Buellton, Carpinteria, Guadalupe, Lompoc, Santa Maria, Solvang, Camarillo, Fillmore, Ojai, Oxnard, Santa Paula, and Port Hueneme. She currently serves as the Chair of the Senate Banking and Financial Institutions Committee.

The California Reinvestment Coalition
The California Reinvestment Coalition (CRC) is the largest statewide community reinvestment coalition in the country, with over 300 member organizations across California that provide services to tens of thousands of Californians. CRC members include affordable housing developers, community development financial institutions, housing counseling agencies, small business technical assistance providers, legal services agencies, and community-based organizations.