Community Orgs To Trump Administration On CRA Rule: “We’ll See You In Court”
The National Community Reinstatement Coalition (NCRC), the California Reinvestment Coalition (CRC) and legal oversight group Democracy Forward announced today they intend to sue the Office of the Comptroller of the Currency (OCC) for unlawfully gutting the Community Reinvestment Act (CRA). Yesterday, the OCC announced a new set of CRA rules that will allow banks to lend less to lower-income communities.
“The OCC went against the majority of public comments and introduced new, gaping loopholes into the rules that will allow banks to reduce their focus on lower-income borrowers and communities, the very communities the law was intended to protect when it was passed in 1977,” said Jesse Van Tol, CEO of NCRC. “It’s an awkward, disjointed and rushed move by a single agency that couldn’t get agreement from the two other agencies that regulate banks. It’s an administrative fiasco. We’ll see you in court.”
Joseph Otting's Mission To Dismantle The Community Reinvestment Act
“The country’s largest regulator of big banks, Comptroller Joseph Otting, made it his mission to dismantle this important civil rights law, issuing a final rule just 5 weeks after receiving over 7,000 public comments. By moving forward despite an overwhelming majority of public commenters disagreeing with the framework put forth in the final rule, it is clear that the outcome was predetermined to fix the game in favor of the big banks to the detriment of communities and the spirit and intent of the law,” said Paulina Gonzelez-Brito, Executive Director, California Reinvestment Coalition. “We will not be deterred by those seeking to rig the system in favor of Wall Street, we’ll see you in court.”
“The Trump Administration has abandoned low- and moderate-income communities amidst a once-in-a-generation public health crisis and illegally erected a significant roadblock to their financial recovery,” said Anne Harkavy, Executive Director at Democracy Forward. “Every step of the way to gutting the Community Reinvestment Act, the administration has denied the public a fair and transparent process. Trump’s OCC tried to silence community groups that voiced opposition and is still withholding the analysis it used to justify weakening anti-redlining protections. We have fought this shady rulemaking process from the start, and the fight will continue.”
The OCC has also fractured the interagency consensus around CRA enforcement, acting without the other two agencies that regulate banks and set rules for CRA compliance, the FDIC and Federal Reserve Board. This solo move by the OCC broke what should be a uniform system for all lenders. Instead, the OCC pressed ahead to force an even more complex and confusing experiment on low- and moderate-income families and communities of color in the middle of the COVID-19 crisis and at a time when the racial wealth gap has been widening.
NCRC, CRC and Democracy Forward filed another lawsuit in April to force the OCC to reveal records and analysis regulators used to come up with the new rules.
Joint Statement On CRA Rule Changes From OCC
A Group Of 15 Civil Rights, Consumer Protection And Industry Leaders Issued The Following Joint Statement:
Today, the Office of the Comptroller of the Currency (OCC) announced long-anticipated changes to rules that enforce the Community Reinvestment Act (CRA). The Federal Reserve Board decided not to join the proposed rule and has offered alternative approaches. The Federal Deposit Insurance Corporation (FDIC), which joined the OCC’s proposed rule, decided not to join the final rule released today.
In the middle of a pandemic that has been hardest on lower-income communities and communities of color, the OCC has rushed ahead and acted alone to reshape CRA rules for the nation’s largest banks – banks responsible for the lion’s share of CRA lending and investing across the country. While the OCC made some improvements from its earlier proposals, the agency decided to go against the majority of comments and stick with new, gaping loopholes that will allow banks to reduce their focus on lower-income borrowers and communities by inflating CRA ratings and by earning more credit for big loans and investments.
Community Reinvestment Act Incentives For Banks
With the economic fallout continuing from COVID-19 and uncertainty looming for many communities traditionally underserved by the nation’s financial institutions, just about everyone who has a stake in CRA, including many bankers, urged the agencies to stop the rule-making process. Importantly, we urged them not to upend, and in fact strengthen, CRA incentives for banks to participate in an equitable recovery for these communities. The FDIC listened, the OCC didn’t. Instead, it moved alone and acknowledged that it went against the majority of public comments that did not support the proposed rule changes.
The new rules stick with an overly simplistic metrics system that creates a loophole for banks to exploit, allowing them to get a passing CRA rating by making investments in communities where they can reap the largest rewards, while leaving too many credit needs unmet for underserved consumers and neighborhoods.
The OCC has also fractured the interagency consensus around CRA enforcement, acting without the other two agencies that regulate banks and set rules for CRA compliance, the FDIC and Federal Reserve Board. This solo move by the OCC breaks what should be a uniform system for all lenders. Instead, the OCC has pressed ahead to force an even more complex and confusing experiment on low- and moderate-income families and communities of color in the middle of a crisis and at a time when the racial wealth gap has been widening.
This is not the way to reopen America and if the President of the United States is committed to an equitable recovery, he should immediately suspend this rule.
This statement was issued jointly by the following organizations:
Americans for Financial Reform Education Fund
Center for Responsible Lending
National Alliance of Community Economic Development Associations (NACEDA)
Consumer Federation of America
National CAPACD-National Coalition for Asian Pacific American Community Development
Leadership Conference on Civil and Human Rights
National Association of Real Estate Brokers (NAREB)
NAACP Legal Defense and Educational Fund, Inc (LDF)
National Consumer Law Center
National Community Stabilization Trust
National Fair Housing Alliance