The House Financial Services Subcommittee on Consumer Protection and Financial Institutions held a hearing on April 9 to assess the Community Reinvestment Act (CRA) and its impact on discrimination and the effect of redlining. The hearing focused on ways to strengthen the Act to ensure neglected communities are fully and fairly served. Full Committee Chair Maxine Waters (D-CA) reminded those present that the legislation, originally passed to reduce discriminatory practices, has been one of the most important civil rights laws in the nation. Witnesses discussed the significance of the CRA as a civil rights law while acknowledging that existing loopholes and the rise of excluded nonbank lenders and financial technology have weakened the legislation.
National Community Reinvestment Coalition (NCRC) CEO Jesse Van Tol testified that the current structure of CRA enforcement is not enough to reverse the historical effects of redlining. Senior Reporter Aaron Glantz from The Center for Investigative Reporting shared results from a recent investigation into 31 million mortgage records that showed a larger gap in homeownership rates between African Americans and whites than during the Jim Crow era. Mr. Glantz attributed CRA failures and the persistent effects of redlining to major lenders’ practices of exploiting the law’s loopholes. Clint Odom, senior vice president of policy and advocacy and Washington Bureau executive director for the National Urban League, called the legislation one of the most important economic and civil rights actions of the 20th century that is now in dire need of reform for the 21st century. National Association of Affordable Housing Lenders President and CEO Benson F. “Buzz” Roberts said the CRA has served as a solid foundation for community development practices and policies, while agreeing it is ripe for modernization.
Noting that redlining and other forms of discrimination primarily impact low-to-moderate income and racial and ethnic minority populations, Representative Lacy Clay (D-MO) asked the witnesses what steps policymakers should consider in order to strengthen the CRA. Mr. Van Tol suggested strengthening the fair lending reviews conducted as part of the CRA exam that was weakened by the Office of the Comptroller of the Currency. He also commended the “American Housing and Economic Mobility Act” introduced by Senator Warren (D-MA), Representative Cedric Richmond (D-LA), and others, that would modernize the CRA, having it apply to more loans and lenders to counteract historic underinvestment and redlining in more urban and rural areas.
Learn more about the hearing at: https://bit.ly/2yNWC2q
Learn more about the “American Housing and Economic Mobility Act” at: https://bit.ly/2S0tIFi