Menendez Blasts Trump Admin’s Gutting of Community Reinvestment Act
Changes to the CRA will lead to redlining, decreased investment in low-income communities
WASHINGTON, D.C. – U.S. Senator Bob Menendez, a senior member of the Senate Banking, Housing, and Urban Affairs Committee, today urged his colleagues on the Senate Floor to join him in overturning the Trump Administration’s rule gutting the Community Reinvestment Act (CRA), which will lead to modern day redlining and decreased investment in low-income communities, which have already been disproportionately affected by the COVID-19 pandemic.
“The Community Reinvestment Act was enacted to put an end to redlining, and spur greater investment in our minority communities and lower income neighborhoods. But even today, we’re still grappling with the socioeconomic and racial consequences of this systemic financial discrimination. Many of our most impoverished neighborhoods are the same neighborhoods that were redlined decades ago,” said Sen. Menendez.“That’s why we must reject the Trump Administration’s proposed rule changes to the Community Reinvestment Act.”
The Office of the Comptroller of the Currency (OCC) recently finalized a new rule essentially gutting the CRA, which will allow banks to deprioritize investments in low- and moderate-income communities. The rule was finalized without the support of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), the other two agencies responsible for carrying out the CRA. The NAACP and Leadership Conference on Civil and Humans Rights also oppose this new rule.
The CRA was enacted to reverse the harmful effects redlining had on communities of color and low-income neighborhoods. The CRA ensures banks provide credit, mortgages, and small business lending to all members of their community, not just the wealthiest. The CRA also helps facilitate investments in community development financial institutions (CDFIs), minority depository institutions (MDIs) and in affordable housing.
The Senator’s remarks, as prepared, are below.
“Today I rise to urge my colleagues to take a stand for civil rights and basic financial fairness and join me in defense of the Community Reinvestment Act.
“For more than four decades now, this core civil rights law has helped ensure that the banks that do business in our low-and-moderate income communities actually invest in those communities.
“Before the Community Reinvestment Act – or CRA as its often called – banks often avoided lending to customers and businesses in the lower income neighborhoods where they opened branches.
“This practice was known as redlining. Back then, banks would draw literal redlines around communities they did not want to lend money to. And not surprisingly the communities that were redlined were black, brown, and low-income communities.
“In essence, they were content to take deposits from low-and-moderate families, people of color, small businesses and farms – but then turned around and denied those very customers mortgages, loans and other lines of credit.
“The Community Reinvestment Act was enacted to put an end to redlining, and spur greater investment in our minority communities and lower income neighborhoods.
“But even today, we’re still grappling with the socioeconomic and racial consequences of this systemic financial discrimination. Many of our most impoverished neighborhoods are the same neighborhoods that were redlined decades ago.
“It’s one of the reasons that the generational wealth of black and brown Americans remains dramatically lesser than that of their white counterparts.
“That’s why we must reject the Trump Administration’s proposed rule changes to the Community Reinvestment Act.
“The Office of Comptroller of Currency’s (OCC) CRA new rule would result in significantly fewer loans, investments, and services to low- and moderate-income communities and would permit banks to avoid business and investments in these neighborhoods.
“In essence, it would lead to a new form of modern-day redlining, all with the federal government’s blessing.
“It’s no wonder why civil rights groups, including the NAACP and the Leadership Conference on Civil and Human Rights, have fought so hard against this new rule.
“They do not want banks to be given the green light to discriminate against minority and low-income consumers.
“Make no mistake, industry stakeholders and regulators are just as divided over the Trump Administration’s actions. In fact, neither the Federal Deposit Insurance Corporation nor the Federal Reserve have joined in this effort.
“That’s why I urge my colleagues to do the right thing and repeal this harmful new CRA rule.
“In a year where the entrenched racial and economic disparities that have long plagued our nation have been exacerbated and on full display, the last thing we need to do is steer money away from black and brown families, homeowners, consumers and businesses.
“So I urge my colleagues to join me in rejecting this new CRA rule.
“This is about protecting civil rights. This is about protecting economic opportunity for all. And this is about continuing to do the hard work of reversing the discrimination, financial disparities and socioeconomic injustices that have plagued our nation for far too long.