Although Industry Opposes the Law, Committee Co-Chair Indicates
Implementation Will Move Forward in 2024

For Immediate Release:
December 12, 2023

Rob Mayo | 312-368-0310 x 2024

Today the Joint Committee on Administrative Rules (JCAR) opted to postpone approval of rules necessary to implement the Illinois Community Reinvestment Act (IL-CRA). The IL-CRA requires banks, credit unions, and nonbank mortgage companies (e.g., Quicken, Guaranteed Rate, Rocket) to invest in, loan to, and serve historically disinvested communities, including Black, Brown, and lower-income communities. Like the 1977 federal Community Reinvestment Act (CRA), the law aims to reverse the effects of redlining. 

While JCAR’s decision not to approve the rules means the IL-CRA, which became law more than two years ago in March 2021, cannot yet be implemented, JCAR Co-Chair State Senator Bill Cunningham made clear that implementation will move forward once all stakeholders have had an opportunity to weigh in on the rules. “The JCAR process is not for re-litigating laws. There will be a CRA in place,” he said during his comments at the meeting. Since the law passed in 2021, credit unions in particular have opposed their being covered by the law. 

“Throughout this process, the Illinois Department of Financial and Professional Regulation (IDFPR) has been committed to making sure final rules for IL-CRA implementation are effective in ensuring the law fulfills its goal of advancing racial and economic equity,” said Horacio Mendez, President & CEO of Woodstock Institute. “While we had hoped today would mark the end of the rulemaking process and the beginning of the enforcement process, we are grateful for Co-Chair Cunningham’s forceful statement for the record that the rules will move forward and that the IL-CRA will soon take effect.”

The IL-CRA is the result of years of racial justice advocacy and builds on its federal counterpart by creating reinvestment obligations for state chartered credit unions and non-bank mortgage companies, and strengthening the obligations of state-chartered banks. The federal CRA covers only banks, but banks now make up a much smaller share of the mortgage market compared to 1977. The outstanding mortgage debt these institutions hold has declined from 74% in 1977 to just 28% in 2007, and, as of 2021, nonbank mortgage companies originated 64% of conventional home mortgages compared to just 25% originated by banks. 

To maximize the effectiveness of the IL-CRA, advocates also intend to pursue legislation in partnership with IDFPR to ensure that IL-CRA implementation includes a disparity study, which will identify the areas of Illinois most in need of the investments, services, and lending that the IL-CRA delivers. Such a study will allow regulators and financial institutions to more explicitly identify and target racial disparities, a core purpose of the law, which was part of the Illinois Legislative Black Caucus’s Economic Equity Pillar. The Economic Equity Pillar was one of four pillars designed to eliminate systemic racism in the State. 

Illinois is only the second state to establish community reinvestment obligations under state law for banks, credit unions, and nonbank mortgage companies, with the first state being Massachusetts. Several other states, including New York, West Virginia, and Rhode Island, have CRA laws that are less comprehensive than Illinois’s.