Skip to main content

Repeal the Community Reinvestment Act and Start Over. American Banker Newspaper BANKTHINK.

Blow up the CRA and start from scratch

By  William Michael Cunningham June 22, 2022, 9:47 a.m. EDT 2 Min Read

The Community Reinvestment Act was enacted in 1977 “to address inequities in access to credit for low- and moderate-income individuals and communities.” The law should be repealed and replaced. Like hanging a crystal chandelier in a lean-to shack, any efforts to revise the law are a waste of time. This especially includes efforts proposed by the Federal Reserve Board “to strengthen the achievement of the core purpose of the statute, and to adapt to changes in the banking industry, including the expanded role of mobile and online banking.”

OneUnitedBankLoans
Percentage of Home Loans Applications Approved, by
race, at OneUnited, a Black-owned bank, in 2020
The increase in financial institution-induced harm, including environmental damage, demands a different, more honest and authentic approach in reviewing CRA’s inability to facilitate access to banking services and credit. This is especially true for African American, Black and, separately, low- and moderate-income individuals and communities.

The Fed, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have long cited phantom CRA progress. The law has failed to reduce anti-Black racial discrimination in financial services, to lower poverty or to lessen environmental destruction.

Black-white differences in wealth, income and life expectancy have not significantly improved over the past 50 years.  Indeed, one confirmation of this is the fact that domestic food insecurity has been growing in African American and in low-income communities.

Failure to meet the goals outlined by CRA is indicative of a systemic problem that the law is ill-equipped to address. The assumptions underpinning CRA, including continual nondiscriminatory access to banking services and economic expansion as a solution for racism and poverty, have been proved invalid.

It is expedient for the Fed, the FDIC, the OCC and those employed by the CRA-dependent organizations they fund to promote a cheerful message that enhanced technology, “community benefit agreements” and financial literacy training will solve problems stemming from both poverty and environmental degradation.

Data from the agencies' own CRA reports show this is untrue. 

DeclineinBanks
Forecast of the Number of Insured Banks, 2021 to 2041
(Orange Line) 
The country and its citizens would be better off with a more coherent, clear-headed and honest assessment of the deteriorating situation. Decades of damage and loss have led us to this point.

As perhaps one of the most experienced, impactful CRA analysts I call on the board, the FDIC and the OCC to bring their approach into line with reality. It is my position that the agencies should drop the ineffective and unhelpful regulatory fig leaf of the Community Reinvestment Act. Blow it up and start from scratch.

It simply has not worked.

From: BankThink Blow up the CRA and start from scratch
By  William Michael Cunningham
June 22, 2022, 9:47 a.m. EDT

Popular posts from this blog

Maternal Health Financing Facility for Black Women: A Solution to an Urgent Problem

Maternal mortality is a significant issue in the United States, with Black women disproportionately affected. Research conducted by the Centers for Disease Control and Prevention (CDC) has shown that Black women are more likely to die from pregnancy-related causes than their white counterparts. However, the issue is not new, and despite the increasing amount of data available, the disparities have remained unaddressed for far too long.  Creative Investment Research (CIR) is among the organizations that believe there is a solution to the problem. Through our proposed impact investing vehicle , the Maternal Health Financing Facility for Black Women (MHFFBW), we aim to tackle the mortality gap and support Black women during childbirth, which will, in turn, benefit their communities. The Facility, based on legally binding financing agreements containing terms and conditions that direct resources to individuals and institutions capable of addressing supply-side conditions at the heart of

Projected Impact of Gun Laws on Corporate Profits in Texas

More Fortune 500 companies are located in Texas than in any other state. Texas successfully used low taxes and minimal regulations as bait to recruit companies like Tesla and Oracle. The state promoted these “advantages” in ads highlighting their “free-market” environment and criticizing the "tax and spend policies of liberal leadership" in Democrat-run states. Four million people migrated to Texas over the past ten years. Our economic models predict a reversal, however. State of Texas corporations on the Fortune 1000 list generate $2.2 trillion in revenue, $158 billion in profit. They have a market value of $3.8 trillion and employ 2.5 million people nationwide. We continue to believe this increased corporate presence in Texas imposes a tax on the nation as a whole. Texas allows anyone 21 or older to carry handguns without training or licenses, and maintains lower gun purchase age limits. Beyond the recent abortion bill, which allows people to sue those who "aid and abe

BRICS Summit 2023: Navigating the Transformation of Global Finance

Recent developments in the global financial landscape have captured the attention of the finance world, promising a new era of integration, transformation, and collaboration. Amidst the excitement, however, it is essential to acknowledge the formidable obstacles that stand in the way of realizing these ambitions. The 2023 BRICS Summit , slated to convene amidst this shifting landscape, is poised to be a significant juncture that could have profound implications for the future of international finance. The resurgence of Bitcoin, marked by an impressive, if smaller, year-to-date price surge, has underscored its enduring relevance. Similar concerns surround the exploration of central bank digital currencies (CBDCs). The UK's digital pound initiative, while forward-looking, raises questions about stability, security, and privacy and potential economic power imbalances. The notion of a BRICS digital currency, potentially extended to include several countries, reflects a desire to chall