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Earlier in the month, VAHC had the opportunity to attend the National Community Reinvestment Coalition’s (NCRC) first annual in-person conference since the pandemic in Washington D.C. Through this Just Economy Conference, attendees were able to connect around methods and practices that can be taken to counter the historic and negative effects of redlining on Black and low-income communities and their ability to access credit.
NCRC’s main vehicle for this work revolves around advocacy for the enforcement and improvement of the Community Reinvestment Act of 1977 (CRA), which was enacted by Congress as a direct response to redlining practices. The law requires banks to sufficiently lend in their local communities in order to receive good CRA ratings that tie directly to their approvals for charter applications, mergers, acquisitions, and the opening of new branches. Rather than enforcing risky loan practices though, CRA instead promotes the access of credit in low-and moderate income (LMI) communities along with intentional reinvestment and revitalization efforts in these neighborhoods
Across the United States, CRA has continually made an impact in providing credit to marginalized communities, aiding neighborhood revitalization projects and providing capital for the development of affordable housing. Looking at just CRA-qualified lending in Vermont since 2009 alone, LMI borrowers in the Greater Burlington Metropolitan Area have received over two billion dollars in home mortgage loans and small businesses have been given over 600 million. Across LMI neighborhoods in Vermont from Barre to Rutland, this practice has persisted thanks to the enforcement of CRA ratings of financial institutions.
Besides just making credit available in LMI neighborhoods, banks can also improve their CRA standings by increasing investments and philanthropy work in these communities. Through Community Benefits Agreements, banks collaborate with local governments and community organizations to implement various community development initiatives such as the creation of affordable housing. A prime example of this is NCRC’s Growth Program which takes capital from banks in need of CRA credits and works with local governments and organizations to aid LMI homebuyers through the construction and rehab of affordable housing, along with financial counseling,
Overall, all of this information about CRA that was conveyed through many wonderful panels and speakers at the Just Economy Conference made it clear that community reinvestment is an incredibly important component for the development of new affordable housing, and it must continue to be adequately enforced by the federal government. Luckily, there is an opportunity for NCRC, social justice-oriented nonprofits, and others to take action to guarantee this for years to come. For the first time in a number of years, the Federal Reserve and the Federal Deposit Insurance Corporation are proposing rule changes to the Community Reinvestment Act with a public comment period that will be open until August 5th. These proposed changes seek to modernize CRA to account for how online banking can transcend a branch’s geographic reach and to allow for the collection of more data that can be used to more accurately determine CRA ratings for each bank. However, NCRC is using the comment period to advocate that the CRA go further through various provisions such as the incorporation of a race as an explicit consideration on CRA exams and reducing a growing inflation of scores so that bank ratings are more realistic.
In the end, CRA will continue to be an important collaboration between all levels of government, nonprofit organizations, and financial institutions to create a better, healthier, and more equitable community for all, but it’s effectiveness will lie in the advocacy of NCRC, conference attendees, and federal regulators .For those interested in learning more about NCRC, CRA, or the comment period on CRA rule changes more information, such as commenting instructions and examples of local action, can be found here.,