January 7, 2020

Trying to Water Down CRA


The 1977 CRA Act empowered residents to demand that banks provide banking services and reinvest in the communities where they collected deposits. Neighborhood leaders fought to keep branches open and urged the banks to “Put our money back” into the neighborhood in loans and mortgages

We always understood that some people had a hard time with the Community Reinvestment Act, which passed in 1977.

Back in the 70s, some of the bank presidents that Bronx leaders met with could not believe that they had to talk with postal workers, coffee delivery people, tenant leaders, religious leaders and others who were not trained bankers. They could not believe that they had to listen to neighborhood peoples’ assessments of what their communities needed. More than a few said as much out loud. “You don’t understand banking”

And in a way, they were right. Many people could not understand why we were putting our money into banks and watching those banks take those deposits and lend them to other communities.

Around that time, lots of people and programs started to reverse the abandonment of the Bronx. One of the major ones was the Community Reinvestment Act (CRA). CRA provided a tool that allowed groups to push banks for new money and programs to support neighborhoods. Groups leveraged that money to better utilize New York City loan programs. It’s never been perfect, but it was really good for our organizing work.

Neighborhood meetings and tours with bankers, regulators, city officials, foundations and investors were part of the work to encourage reinvestment, develop new funds for community development and gain partners. Neighborhood leaders identified buildings they wanted to see renovated and returned to the neighborhood with Reclaim Project signs. The CRA got banks to the table and over time banks saw that investing in Bronx affordable housing was good business.

A lot of people (bankers included) have talked about how to improve it; a number of bankers have talked about the reporting and paperwork they have to do as part of CRA.

One of the federal bank regulators, the Office of the Comptroller of the Currency, recently decided to revise CRA regulations; the FDIC decided to support the changes. The Federal Reserve has not gone along.

Joseph Otting, the Comptroller of the Currency himself, came to New York City to hear the community’s concerns prior to the issuance of the new proposal. While he seemed to listen to people’s ideas to improve CRA at the time, his agency’s proposal seems to be diluting CRA and reducing effective work in our neighborhoods. As a result, UNHP and many others are opposing the proposal.

We’d like to share this link to a history of the goals of CRA and a clear critique of the new proposal. The author is Martin Gruenberg. Back in the early days of our work in the Bronx, Gruenberg, a Bronx native, was a lawyer working with then Bronx Congressman Jonathan Bingham. He saw the impact of this young piece of legislation and launched a notable career in government. After serving as Chair of the FDIC, he still serves on the FDIC board and was the lone voice of dissent at the recent FDIC meeting at which these changes to CRA regulation were approved.

The CRA at a Crossroads Forum featured a speech by Martin J. Gruenberg, Board member of the FDIC, that emphasized the need to keep to the intent of the law which has always been to combat redlining and disinvestment and ensure banks are meeting local needs.

It has been my privilege to work with neighborhood leaders during my time with the NWBCCC Reinvestment Project and in a different way with UNHP around community reinvestment. Through our work, we see that access to branches as well as low-cost financial productsappropriate investment in real estate, and availability of data are vital to the Bronx neighborhoods we serve. These goals can only be served by a robust Community Reinvestment Act.

Over the next couple of months, a lot will be happening around CRA. If you are interested in finding out more about CRA and this proposal, please contact me at Jim@unhp.org.

Don’t dilute the CRA,

Jim Buckley