WASHINGTON–The National Community Reinvestment Coalition (NCRC) and a coalition of national consumer, civil rights, housing and community development organizations are calling on federal banking regulators to withdraw proposed changes to the Community Reinvestment Act (CRA), warning the revisions would reduce lending and investment in underserved communities.
In an Oct. 13 statement, issued one day after the 49th anniversary of the CRA, the organizations urged the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corp. (FDIC) to abandon the proposal and instead strengthen requirements for banks to serve low- and moderate-income communities.
The groups contend the proposed changes would weaken incentives for affordable housing development, small-business lending, community investment and partnerships between banks and community development financial institutions (CDFIs).
“When organizations representing communities, consumers, civil rights advocates and housing leaders across the country come together in opposition to a proposal, regulators should pay attention,” NCRC President and CEO Jesse Van Tol said in a statement.
Van Tol said weakening the CRA amid rising housing and living costs would undermine a longstanding tool for encouraging private investment in underserved communities.
Concerns Over Lending, Housing
The CRA was enacted in 1977 to address discriminatory lending practices, including redlining, and encourage banks to meet the credit needs of communities where they operate.
National Urban League President and CEO Marc H. Morial said the proposed changes threaten decades of progress in expanding access to credit and economic opportunity.
“The proposed rulemaking would weaken support for affordable housing, limit access to capital for entrepreneurs and small businesses, reduce community investment, and jeopardize resources that help families build wealth and financial security,” Morial said.
The National Fair Housing Alliance also warned the revisions could reduce support for community nonprofits and special purpose credit programs designed to expand access to financing in historically underserved neighborhoods.
Meanwhile, the National Housing Law Project said the changes could worsen the affordable housing shortage by discouraging bank financing for construction and community development.
Impact on CDFIs, Small Businesses
Opportunity Finance Network President and CEO Harold Pettigrew expressed concern that the proposal would weaken incentives for bank-CDFI partnerships and create additional uncertainty for community development financing.
Small Business Majority similarly warned that exempting more banks from CRA requirements could reduce investment in CDFIs and other organizations that provide loans and technical assistance to small businesses.
Consumer Action said the changes would significantly reduce the number of banks subject to certain CRA obligations, potentially limiting access to financial services for lower-income consumers.
Other organizations opposing the proposal include the Consumer Federation of America, National Consumer Law Center, Americans for Financial Reform Education Fund and Natural Resources Defense Council.
The groups also raised concerns about reduced financing for climate resilience, disaster recovery and economic development projects.
Call for Stronger Requirements
The coalition said regulators should pursue a revised CRA framework that preserves incentives for community investment, increases transparency and strengthens accountability for financial institutions.
NCRC and its partners called on the OCC and FDIC to withdraw the proposal rather than finalize changes they contend would weaken banks’ responsibilities to the communities they serve.
