Warner leads effort to strengthen credit access for low-income communities

U.S. Sen. Mark Warner (D-VA) and a group of 15 senators sent a letter to the Office of the Comptroller of the Currency (OCC), the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation (FDIC), urging them to take steps that would strengthen access to credit for diverse communities under the Community Reinvestment Act (CRA).

The CRA was signed into law in 1977 to provide a framework to ensure that banks serve the needs of all members of their community, regardless of their race, gender, or income. By ensuring that banks provide access to credit for low- and middle-income (LMI) communities, the CRA has helped ameliorate redlining that has disadvantaged minorities and disinvestment that has harmed urban and rural communities. As a result, the CRA has expanded homeownership to more Americans, financed more small businesses, and transformed local economies.

The Senators urged the agencies to take the opportunity to strengthen the CRA by expanding its applicability to regions and institutions that are not currently covered by the CRA and avoid proposals that could undermine the long-standing effectiveness of the law.  In addition, the Senators emphasized the need to reflect the impact of digital banking in any new regulations.

“When the CRA became law in 1977, a bank’s geographic footprint and the areas surrounding it was a good proxy for the communities served by the bank.  That no longer holds true.  A bank should be examined under the CRA for how it serves LMI communities where it has a physical footprint and in areas where the bank accepts deposits and does substantial business, and it should receive CRA credit for qualifying loans and investments made in those areas,” wrote the Senators.

The Senators also advised the federal agencies to avoid proposals that could undermine the effectiveness of the CRA.  “While we generally support expansions that benefit LMI communities, we are concerned that permitting expansions for banks with ‘less than satisfactory’ ratings undermines the only formal compliance mechanism that exists under the CRA,” the Senators warned. “Furthermore, we believe that narrowing the universe of loans with respect to which a regulator evaluates a bank’s illegal or discriminatory credit practices is inconsistent with a key finding of Congress in passing the CRA: banks must demonstrate that they ‘serve the convenience and needs of the communities in which they are chartered to do business.’”

In addition to Sen. Warner, the letter was signed by Sens. Tim Kaine (D-VA), Cory Booker (D-NJ), Sherrod Brown (D-OH), Catherine Cortez Masto (D-NV), Elizabeth Warren (D-MA), Doug Jones (D-AL), Amy Klobuchar (D-MN), Bob Menendez (D-NJ), Kirsten Gillibrand (D-NY), Dianne Feinstein (D-CA), Brian Schatz (D-HI), Chris Van Hollen (D-MD), Gary Peters (D-MI), Ron Wyden (D-OR), and Debbie Stabenow (D-MI).