Federal financial regulators recently held the final meeting about the Community Reinvestment Act (CRA) in downtown Los Angeles. It culminated the first public opportunity to assess reforms left out of the recent financial reform legislation passed by Congress.
While many consumer protections were included in the recently passed Dodd-Frank Act, there have been no major changes to the CRA for a decade and a half despite various shift in the lending industry and financial landscape. CRA has been a key component in assisting low-income and non-White neighborhoods access mainstream financial institutions.
The California Reinvestment Coalition (CRC) and its allies have organized public testimonies from small business owners, community financial lenders, organizations, and concerned citizens to identify critical disparities in the current law.
Groups are urging regulators to strengthen oversight and enforcement of the Community Reinvestment Act as a way of assisting with the nation’s economic recovery.
Lack of enforcement of CRA allowed the practices many lenders, mortgagors, and loan organizations to devastate thousands of families, businesses, and neighborhoods in California.
“The whole purpose of CRA was really to ensure fair access to lending and investment services in low and moderate income communities,” Vermont-Slauson Economic Development Corporation Executive Director Marva Smith Battle-Bey said. “We just think the feds can do a better job than what’s going on today.”
The CRA, passed in 1977, was landmark legislation requiring financial institutions to serve the lending, investment, and financial service needs of their communities.
“CRA once meant an end to overt redlining. But in recent years, banks have run amok. The regulators need to do their job better to be sure that neighborhoods have access to safe lending,” said CRC Executive Director Alan Fisher. “These hearings are an opportunity for small businesses and overlooked neighborhoods to be heard.”
“In addition, if there is significant litigation bearing on bank performance and responsiveness to low-income communities or communities of color, a hold should be placed on the (banks’ merger) application,” Fisher said. “The current situation where banks are sold overnight by the FDIC has left no opportunity for the community to comment or for community involvement.”