Proposed CRA Changes Threaten Access to Capital in Underserved Communities

Since the 1980s, neighborhood activists have had the ability to sit across the table from the most powerful bankers in the land. They portray their community’s critical needs for capital to buy homes and start businesses, presenting data showing stark lending disparities between their neighborhoods and better off white communities. And they assent to sign off on a bank’s application to federal regulators to buy or merge with another institution—if the lender signs an agreement that committed millions of dollars in lending to their neighborhood. It is high stakes for all, and for once, the neighborhood activists have leverage, albeit for a few days or maybe a week. Lending deals get made, and the banks have gotten to cross state lines and grow bigger and bigger.

For the example, as NPQ covered, in 2017, activists in Louisiana were able to get New Iberia Bank to commit to $6.72 billion in loans to serve low- and moderate-income communities, more than 24 percent of total bank assets. In 2016, Key Bank in Ohio committed $16.5 billion in lending and $175 million to philanthropy to get community assent for a merger. That year, Huntington Bank, also in Ohio, similarly committed $16.1 billion in lending and $25 million to philanthropy, as well as creating a $30 million fund to support bank branches in low- and moderate-income communities.