“The banks of this country are remote from the people and the people regard them as not belonging to them but as belonging to some power hostile to them.”
I started my March 15, 2015 blog with this quote. I first acknowledged that it was not a quote from US Senator Elizabeth Warren; but it could be. It is from a 1908 keynote address to the American Bankers Association by Woodrow Wilson.
Now in the last month, Senator Warren @SenWarren has awakened my imagination to the possibility of electing a President who is an affordable housing advocate, not a luxury developer. She has introduced legislation, titled the American Housing and Economic Mobility Act, which takes aim at segregation, redlining, restrictive zoning, and the loss of equity by low-income homeowners.
The Atlantic article by Madeleine Carlisle on September 25th describes it as “perhaps the most far-reaching assault on housing segregation since the 1968 Fair Housing Act. It’s ambitious, pouring half a trillion dollars over 10 years into affordable-housing programs.”
Warren’s bill would strengthen anti-discrimination laws by expanding Fair Housing Act protections to include gender identity, sexual orientation, marital status, and source of income, attempting to limit housing segregation in the future. It will authorize more enforcement mechanisms for the federal Community Reinvestment Act [CRA] and expand it to include credit unions and nonbank mortgage companies.
Meanwhile, the Trump Administration has started the comment clock on its efforts to strip “community” out of a law that’s supposed to strengthen America’s communities. A New York Times Op-Ed on August 28th by Jesse Van Tol, chief executive of the National Community Reinvestment Coalition [NCRC], ran with the headline: “A Green Light for Banks to Start ‘Redlining’ Again.”
The Community Reinvestment Act [CRA] was passed in 1977 to end “redlining” by requiring banks to lend money in the communities where they are chartered to do business or receive deposits. According to NCRC calculations, banks have made nearly $2 trillion in small-business and community development loans since 1996 to meet CRA requirements.
This impressive record is now at risk of being turned into a math formula, which would make CRA exams considerably less effective in evaluating how banks are responding to local needs in metropolitan and rural counties. One ratio cannot tell an examiner, a bank, a mayor, or a member of the public how responsive a bank is to its various local service areas.
If CRA exams award points for financing or activities that do not address lack of access to banking or community development needs in lower income areas, then CRA will be less effective in channeling resources to the very communities that were the rationale for its passage. Coupled with an expansion of the kinds of activities that could count as “community lending,” it could allow banks to make fewer loans in poorer urban, suburban and rural communities.
Ignoring the lens of “equitable development,” it could accentuate CRA credit for loans to luxury and market-rate housing in economically and racially diverse communities that will only further real estate speculation, displacement and the lack of affordable housing for those Americans who should benefit from CRA lending.
Comments to these proposals to weaken CRA must be submitted on or before November 19, 2018. For more info, including instructions on how to submit your comment go to: ncrc.org/treasureCRA
Reinvesting in communities can make America’s economy great for all. At a time when power is again becoming hostile, we must Treasure CRA in order to pursue a Just Economy.