Take Action to Protect CRA Investment in Low-Income Communities

Recently proposed changes to the Community Reinvestment Act (CRA) could redirect billions of dollars in lending and investment away from low-income and minority communities. Currently, banks meet CRA requirements by providing capital for affordable housing, small businesses, and economic development in low- and moderate-income communities.

Now, a Trump administration appointee is proposing rule changes that could redirect these funds to sports stadiums, roads, bridges, and other infrastructure projects. The proposal would make redlining legal again by permitting banks to avoid investment in low-income and minority neighborhoods. It would make banks far less accountable and connected to the communities they are required to serve.

These rule changes will make it even more challenging for the communities we serve to survive and recover from the COVID-19 pandemic.

Comments are due by April 8, 2020.

Additional background information and resources are available from our national partners at the National Community Reinvestment Coalition and the National Alliance of Community Economic Development Associations.

Points you may want to emphasize in your comment, which Housing Action believes are of particular importance:

• Proposed changes, such as having a list of CRA-approved activities and a bank’s ability to broaden its assessment area, will result in significantly less investment in low- and moderate-income communities, as banks will be incentivized to focus on activities on that pre-approved list and in higher-income communities.
• Under the proposed rule change, the definition of affordable housing will be relaxed to include middle-income housing in high-cost areas. Combined with the proposed broadening of assessment areas, this will result in funding less housing for those with the most severe housing needs.
• The proposed single evaluation measure (the “one ratio”) will encourage banks, in an effort to limit overhead expenses, to satisfy their CRA obligations by reducing the number of CRA-qualifying projects and focusing on projects with a big price tag. The incentive to engage in smaller, more targeted community development loans, investments, and grants based on community needs and desires would disappear.
• The overall impact would be to the return of redlining—the systematic denial of lending, investment, and other banking services to residents of communities of color. Meeting local needs in communities that have been historically discriminated against is supposed to be foundation of the CRA. 

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