On August 5th, 2022, Community Progress and forty-three supporting organizations across the country submitted a public comment calling for the modernized Community Reinvestment Act to center racial equity and embed land banking strategies.
You can read our comment here.
Passed in 1977, the Community Reinvestment Act (“CRA”) is one of the most important pieces of legislation working to bring financial resources into historically underserved neighborhoods nationwide. The proposed rulemaking announced in May was jointly issued by three Federal Agencies—the Federal Reserve Board of Governors, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation—which share responsibility for CRA oversight and relevant performance evaluations of financial institutions. This joint effort represents the first major revisions to CRA regulations since 1995.
Through the CRA, the Agencies encourage banks—from smaller community and regional banks to international conglomerates with billions in assets—to help meet the credit needs of communities, especially including low- and moderate-income neighborhoods. The National Community Reinvestment Coalition notes that from 2009 to 2020, more than $4 trillion dollars in CRA-qualified lending went to homeowners and businesses in low- and moderate-income neighborhoods, pointing to the massive significance of the CRA and its impact on communities across the US.
The CRA’s core purpose is to combat the impacts and legacies of redlining—an expressly racist policy that has contributed enormously to the present racial wealth and homeownership gaps—by regulating how financial institutions lend and make investments in low- and moderate-income communities. However, the CRA is “color-blind;” despite the strengths and impacts of the CRA, the law has failed to adequately change persistent racial disparities in lending, banking, and investments.
Community Progress’ recommendations focused on three areas of concern:
- Explicitly include race and racial equity in the modern rule. Race must be central in the modernized CRA in order to equitably revitalize communities of color impacted by the longstanding repercussions of redlining.
- Recognize the work of land banks as CRA-eligible. Land banks play an important, innovative role in community development, and land banks and land banking activities should be included in the final CRA regulation.
- Don’t limit the scope or scale of CRA. Proposed changes to how the Agencies categorize banks size could limit the flow of resources to historically underserved communities, as larger banks have more requirements than smaller institutions in the proposed rule. This could undercut the CRA’s capacity to support a more equitable future.
We expect the Agencies to share findings and next steps stemming from this public comment process in the coming months and look forward to staying engaged to ensure that racial equity and land banking are embedded in the final rule.
As of this blog post, Community Progress is one of several hundred commenters to submit ideas and positions to the Agencies. Interested in learning about the diverse set of comments from neighbors, academics, bankers, community organizations, and more? Visit the Office of the Comptroller of the Currency’s comments page here.
For questions about our CRA advocacy and continued engagement on this important issue, reach out to Michael Bochnovic with our Policy and Research team.