Community Reinvestment Act – Let’s Make it Work

The Community Reinvestment Act (CRA) was passed in 1977 under President Jimmy Carter to end racially discriminatory practices in real estate and lending including redlining that was outlawed by the 1968 Fair Housing Act. Unfortunately, the practices prohibited by both federal laws are still occurring.  

After 25 years, the CRA rules have been updated.  With the new rules, banks must do more.  Once again the goal is to end redlining and solve the affordable housing crisis without displacement of communities of color. The new rules should encourage green financing and not make climate disasters worse since they already hit communities of color the hardest.

Not only does the impact of previous redlining endure today in the wealth gap and the difference in homeownership, but it is also continuing in the practices outlined by Leah and Richard Rothstein in Just Action: How to Challenge Segregation Enacted Under the Color of Law.  This book follows Rothstein’s earlier book, Color of Law, which outlined how the law helped facilitate discrimination rather than stop it. Rothstein and his daughter, a lawyer specializing in housing law, outline how the housing industry continues to discriminate and they present many good ideas on how it has been and can be fought. 

Even when Black people did build thriving neighborhoods, whites intentionally destroyed them through mob violence such as in Tulsa, (Greenwood) OK or Rosewood, FL, or through city and highway planning decisions such as running a freeway right through the heart of the neighborhood. The decision in Atlanta to put Cop City in a park adjacent to Black communities is yet another example.

The new rules don’t cover everything and have been criticized for not making racial wealth equity goals explicit. One change was that the old rules relied on banks in communities, but today a lot of banking occurs online and with mobile phones.  So, the requirement to serve everyone fairly has been extended to online transactions.  Banks must comply with four key goals by January 2026:  expand access to credit, investment, and banking in low- and low-moderate income communities; extend rules to online and mobile banking; provide more clarity and consistency in the application of the CRA regulations; and use the revised method to measure compliance based on peer and demographic data.  Small banks also must comply.

The National Fair Housing Alliance said the rules failed to face head-on the main barriers to credit for people of color. By the second quarter of 2022, white homeownership was 75% compared to 44% for Black households. That gap is the same as it was in 1970 – 52 years and not one iota of improvement.  

The Biden administration has not been silent.  The administration began a project, Combating Redlining Initiative, in 2021. On October 19, 2023, Attorney General Garland announced a $9 million settlement with Ameris Bank in Jacksonville, FL, for denying loans to Black and Latino residents. By the end of October 2023, the federal government had obtained $107 million in restitution and penalties from many banking institutions nationwide under this program.  

The Consumer Financial Protection Bureau accepts complaints about CRA. Some warning signs are refusing you credit when you qualify, charging you a higher interest, discouraging you from applying, offering you less favorable terms, or closing your account.

Often it is difficult to know whether they have done this, but you can check with the National Community Reinvestment Coalition (NCRC) below.  Rothstein outlines in his book the practice of appraisers valuing homes of Black people less but assessors charging Black neighborhoods a higher tax rate.  Milwaukee, Wisconsin is a prime example of that. Some “testers” have had Blacks show a house and get one appraisal price and then had whites show the house after removing any indication the owners are Black and get a much higher price. Lawsuits against the appraisal industry followed.  

If you believe you have been discriminated against, submit a complaint to CFPB online or call 855-411-CFPB (2372).  Be sure to write down the dates, the name of the financial institution, who you talked to, the amounts in question, and what everyone said.  Keep any papers or business cards you were given.

To get more information or hold financial institutions accountable, you can also contact.  #TreasureCRA #JustEconomy https://www.ncrc.org/cra