National
People’s Action is preparing to celebrate the 25th birthday
of one of the most important laws for low-income people in the country—The
Community Reinvestment Act (CRA). Federal Reserve Board Governor
Edward Gramlich recently estimated that CRA has been responsible
for about $117 billion annually in home, small business, and community
development lending and investing. The CRA has particular significance
to NPA because CRA was one of the first victories that NPA won.
The fight for the Community Reinvestment Act started in Chicago
when community members were being denied loans according to the
location of the property they wanted to buy, whether it was in a
low-income or minority neighborhood—a practice known as redlining.
NPA was first successful in getting the Home Mortgage Disclosure
Act (HMDA) passed, which gave community leaders the proof they needed
to show that entire communities were being redlined from access
to loans for home and businesses. They then secured the passage
of the CRA which required banks to invest a certain amount of money
into the neighborhoods they once ignored.
Without access to loans from banks, neighborhoods would die from
lack of investment. Residents can’t improve the housing stock
or support the development of any new business opportunities. Community
groups that have worked with NPA have used the CRA to get banks
to invest in low and moderate-income neighborhoods. These partnerships
have resulted in flexible lending products, increased numbers of
minority loan officers, branches in minority neighborhoods and small
business loans directed to low-income areas. A key component of
these partnerships are lending benchmarks so those involved can
measure their effectiveness.
Currently, the CRA is under a regulatory review period by the four
federal banking regulators. Community groups have submitted comments
to the regulators urging them to modernize the CRA to keep pace
with financial industries. By modernizing the CRA, community groups
will be able to use one of the most important laws to fight newer
threats to their neighborhoods like predatory lending.
“CRA is the people’s law,” said Brenda LaBlanc,
co-chairperson of National People’s Action. “We wrote
it. We passed it. We’re making it work for our neighborhoods.
We’re going to fight anyone that tries to take it away or
make it weak.”
CRA agreements continue to be signed. The East Side Organizing Project
recently signed an agreement with Charter One Bank, which will make
the bank increase their lending by 300% in minority census tracts
in Cleveland. The Central Illinois Organizing Project (CIOP) signed
an agreement with Union Planters Bank. CIOP has pushed the bank
to increase mortgage lending by three times to low and moderate-income
borrowers, equalization of loan approval and denial rates based
on race of borrower.
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