House Democrats Urge Banking Agencies to Strengthen CRA Rules
Over 70 Democratic congressional representatives urged banking regulators to finalize amendments to rules implementing the Community Reinvestment Act ("CRA") to "finally end the discriminatory practice of redlining."
In a letter to the leadership of the Federal Reserve Board, the FDIC and the OCC, the representatives urged action "to crack down on the shameful practice of redlining that persists today." They cited testimony and research demonstrating that redlining practices continue and blamed "loopholes" that permit banks to evade the purpose of the law. The representatives also criticized former Comptroller of the Currency Joseph Otting for attempts "to advance his regressive ideas with a proposed rule to undermine the CRA," a proposal that was later rescinded.
The representatives urged the regulators to ensure that (i) CRA exams closely consider how bank services, lending and investments impact minority and low-income communities, (ii) banks only receive credit for engaging in "meaningful investment" in minority and low-income communities, not just the "bare minimum" and (iii) grading and exam standards are updated to more rigorously monitor banks' investment activities with respect to minority and low-income communities.
To ensure that the needs of minority communities are met, the representatives encouraged banking regulators to consider comments submitted by relevant market participants, including (i) consumer, civil rights and other community groups, (ii) Minority Depository Institutions, and (iii) Community Development Financial Institutions.
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