Community Reinvestment Act

NACEDA Comments on Federal Reserve Proposed CRA Rule Change

On February 26, NACEDA submitted comments on the Federal Reserve Board's Advance Notice of Proposed Rulemaking (ANPR) for the Community Reinvestment Act (CRA). The ANPR solicited input on ways to evaluate how banks meet the needs of low- and moderate-income communities. Overall, NACEDA thinks that the Fed asked the right questions and has engaged in a productive dialogue to community development stakeholders. However, we have a fundamental concern, which we have asked the Fed to address.

We do not think the ANPR does enough to address how banks are documenting and identifying community development needs and engaging with community stakeholders. In addition, the ANPR proposes a non-exhaustive list of activities that would be eligible for CRA, tacitly relinquishing banks from their responsibility to do the hard work of knowing their communities. As our letter states, "Why would a bank participate in months of community planning meetings when they can pick something from a list developed by their regulator?"

We trust the Federal Reserve Board of Governors to take seriously the comments and thoughts of NACEDA and its members. We look forward to engaging with them in the months to come in order to bring the Community Reinvestment Act into the modern age

NACEDA also signed this comment letter urging the Federal Reserve Board to adopt a more race-conscious Community Reinvestment Act.

Court Rules Lawsuit Challenging OCC CRA Rule Can Proceed

On February 1, a judge ruled that a lawsuit can proceed that seeks to invalidate the OCC's reforms to the Community Reinvestment Act can proceed. The National Community Reinvestment Coalition, California Reinvestment Coalition, and Democracy Forward sued the OCC in June, alleging that the agency's CRA reform rule would "gut" banks' obligations to invest in their communities. They also argued that the rulemaking process violated the Administrative Procedure Act.

The Biden Housing Platform on CRA:

"Strengthen and expand the Community Reinvestment Act to ensure that our nation’s bank and non-bank financial services institutions are serving all communities.
 The Community Reinvestment Act currently regulates banks, but does little to ensure that “fintechs” and non-bank lenders are providing responsible access to all members of the community. On top of that gap, the Trump Administration is proposing to weaken the law by allowing lenders to receive a passing rating even if the lenders are excluding many neighborhoods and borrowers. Biden will expand the Community Reinvestment Act to apply to mortgage and insurance companies, to add a requirement for financial services institutions to provide a statement outlining their commitment to the public interest, and, importantly, to close loopholes that would allow these institutions to avoid lending and investing in all of the communities they serve." -  The Biden Plan for Investing In Communities Through Housing 

Federal Reserve Advance Notice of Public Rulemaking (closed February 16, 2021)

OCC Bulletin Summarizes Key Provisions and FAQs

On November 9, the OCC released Bulletin 2020-99, which discusses key provisions of the June 2020 Community Reinvestment Act (CRA) Rule and includes FAQs. The final rule was technically effective on October 1, but the final rule provides for at least a 27-month transition period for compliance based on a bank’s size and business model. 

Senate Blocks Measure to Overturn OCC Rule Change

The Senate voted 48-43 on October 19 to reject a resolution that would have blocked the Office of the Comptroller of the Currency  (OCC) rule revamping the Community Reinvestment Act. Senator Sherrod Brown's speech on the floor of the U.S. Senate on October 19 explains why the OCC rule change is so harmful to low- and moderate-income communities. In June, the House of Representatives passed a measure to nullify the OCC’s version of the CRA modernization final rule, however it needed Senate approval. 

NACEDA Strongly Opposes OCC Rule 

The Office of the Comptroller of the Currency (OCC) announced a final CRA rule on May 20 with a list of CRA qualifying activities. The NACEDA network strongly opposes the rule because it will redirect billions of dollars in bank loans, investments, and critical financial services away from low- and moderate-income communities and enable redlining. The OCC's rush to push through a rule without the participation of the Federal Reserve and FDIC creates multiple sets of CRA regulations across agencies. Having to know which set of regulations apply to which bank will make the job of serving low- and moderate-income communities harder.

NACEDA Statement
"The fact that the FDIC and Federal Reserve chose not to participate begs Congressional action. When regulators can't agree, Congress steps in to tell them how to agree. It's Civics 101" said NACEDA Executive Director Frank Woodruff in a statement issued on May 20, 2020.

NACEDA Submits CRA Comments to OCC and FDIC
NACEDA's comment letter attempts to interpret and respond to the proposed rule through the lens of those 4000 community-based organizations and community development corporations, particularly the smaller and medium-sized organizations that serve the hardest to reach communities. It was submitted to the OCC and FDIC on April 8, 2020. 

NACEDA Network Calls for Suspension of Rulemaking During Pandemic
Signed 32 state and regional associations for community development and submitted OCC and FDIC on March 27, 2020, NACEDA's letter stated, "Continuing the rulemaking process with an April 8, 2020 comment deadline forces community based organizations to choose between saving lives and livelihoods now and helping to shape the long-term economic opportunities their communities will be able to access for decades to come."

Will Federal Regulators Gut Community Development under Cover of COVID? 
Nonprofit Quarterly article cites the NACEDA letter signed by 32 state and regional community development associations to halt the CRA rulemaking process during the pandemic & Frank Woodruff's op-ed explaining why the new rule would be a clear invitation to redlining.

Calls to Cease Non-Coronavirus rulemaking grow louder
American Banker article
quotes NACEDA letter signed by 32 state and regional community development associations plus other calls to halt the CRA rulemaking process during the pandemic.

Questionable Reforms To A Law Ensuring Banks Do Right By Low-Income Neighborhoods Are Moving Forward Amid The COVID-19 Pandemic
Blavity article featuring Nate Coffman of the Ohio CDC Association and Bill Faith of Coalition on Homelessness and Housing in Ohio

Hospitals Take Note—An important source of funding to address the social determinants of health may be disappearing
Build Healthy Places Network blog

Civil rights and housing advocates warn proposed change to federal law could spell the return of redlining 
Cleveland Plain Dealer article featuring Nate Coffman of the Ohio CDC Association, Chris Alvarado of Slavic Village Development and Bill Faith of Coalition on Homelessness and Housing in Ohio

Proposed changes would slow progress toward equitable lending in minority communities
MinnPost Op-Ed by Jim Roth of the Metropolitan Consortium of Community Developers, Nasibu Sareva of the African Development Center, and Kathy Wetzel-Mastel of PRG 

Rule change could allow redlining to resume
The Columbus Dispatch Op-Ed by Nate Coffman of the Ohio CDC Association

Changes to Community Reinvestment Act will return us to redlining
Houston Chronicle Op-Ed
by Lori Pampilo Harris of the Houston Housing Collaborative

Fearing proposed changes to community lending regulations would re-legalize redlining
NJ Spotlight Op-Ed
by Staci Berger of Housing and Community Development Network of New Jersey and John Restrepo of Garden State Episcopal Community Development Corporation

Redlining would be relegalized by CRA reform proposal
Shelterforce article by Frank Woodruff of the National Alliance of Community Economic Development Associations | January 9, 2020