There was near unanimous agreement among presenters from community-based organizations, trade groups, and bankers that the CRA rules must be updated to reflect significant changes in the financial marketplace and that regulators and financial institutions should do more to systematically assess community needs, gather additional public input, set clear goals and standards, and evaluate financial institutions’ outcomes (not processes) in meeting identified financial services and community needs. The representative for J.P. Morgan Chase, N.A.,   was a noticeable exception to the clamor for CRA changes in stating, for example, that the current approach to determining CRA assessment areas based on branch locations is “sound” and that  banks shouldn’t be required to make public their plans for meeting CRA obligations because they are “proprietary.” A transcript and video of the entire hearing will be available online.

Woodstock Board member and Treasurer Tommy FitzGibbon of First Michigan Bank and I presented comments as part of the first panel regarding changes needed in determining the geographic scope of CRA assessment areas. Georgia Tech professor and former Woodstock staffer Dan Immergluck presented on the second panel regarding CRA coverage of affiliate activities and the performance test. NCRC member Ignatius MacLellan of Northern New England Housing Investment Fund presented as part of the third panel on emerging issues.

Thanks to the many members and friends of the Illinois Community Investment Coalition (convened by Woodstock Institute) and National Community Reinvestment Coalition who participated in the hearing, including:  Rev. Jesse Jackson, Sr., Founder and President, Rainbow PUSH Coalition; Bobbi Ball, Partners in Community Building; Rob Breymaier, Oak Park Regional Housing Center; Robin Coffey, NHS Chicago; Karen Harris, Sargent Shriver National Center on Poverty Law; Calvin Holmes, Chicago Community Loan Fund; Jean Ishmon, Northwest Indiana Reinvestment Alliance; Kevin Jackson, Chicago Rehab Network; Trinita Logue, IFF; Otis Monroe, The Monroe Foundation; Hedy Ratner, Women’s Business Development Center; Elisabeth Risch, Metropolitan St. Louis Equal Housing Opportunity Center; Gail Schecter, Interfaith Housing Center of the Northern Suburbs; and the many members of National People’s Action and Illinois People’s Action.

Kudos to Woodstock Vice President Tom Feltner, who coordinated CRA trainings for ICIC and NCRC members in the Midwest, and to Woodstock’s Katie Buitrago, who took photos and “tweeted” at the hearing. A few of our partners’ comments are noted below.

“A large body of research concludes that minorities received more high-cost and risky loans than was justified based on their creditworthiness,” said Ms. Ball. “We need responsible mortgage lending to revitalize neighborhoods hit hard by foreclosures, and sustainable small business lending to encourage badly-needed job creation. If CRA considered lending and services to minorities, racial disparities in lending would be greatly reduced.”

“We need CRA to encourage banks to offer low-interest, long-term investments in Community Development Financial Institutions,” said Mr. Holmes. “CDFIs help to fill in lending gaps in the community development marketplace, often making the critical difference in moving a community development project forward, and we still need affordable, patient investments to do so.”

“The economic backbone of many urban and rural communities is ‘ma and pa’ businesses owners, often storefront operations, that hire locally and are depended upon by many for the basic needs of life,” said Mr. Monroe. “However, these stores are laying off employees, ordering fewer commodities, reducing hours, or simply closing, due to the inability to receive credit. We urge the CRA regulators to evaluate how Small Business Administration-approved lending institutions are developing, marketing and investing in the expansion of micro-enterprise programs.”

“The omission of an explicit racial assessment in the CRA has resulted in regulation that has allowed financial institutions to ignore the racial impact of their products,” said Mr. Breymaier. “CRA cannot be fully effective unless it explicitly includes race as a factor of analysis and incentivizes grants, investments, lending, and services that encourage the affirmative furthering of fair housing.”

Interested persons are encouraged to submit written statements for the record by August 31.  Woodstock Institute’s testimony is posted on our website and our written comments will be available shortly. You can customize a letter from NCRC’s template. If you have questions or need help in forming your CRA comments, please contact us at 312.368.0310.

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