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Attorney General Josh Stein Fights to Protect Underserved Communities from Banking Discrimination

For Immediate Release:
Thursday, April 9, 2020

(RALEIGH) Attorney General Josh Stein today urged the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to withdraw a proposed rule that threatens to undermine the Community Reinvestment Act (CRA) and congressional efforts to combat banking discrimination. The CRA is a critical civil rights tool that directs trillions of dollars in investments back to low- and moderate-income communities and provides access to financial services and loans that make affordable housing more available and support small businesses across the country.

“The CRA is vital to protecting minorities and people with lower incomes from discrimination in banking that holds them back from financial success,” said Attorney General Josh Stein. “We must protect people who are trying to invest in their futures by buying a home, saving and paying for college, or starting a business. Now, as millions of North Carolinians are facing financial hardships and job losses, we cannot reduce financial protections that keep them safe. I urge the OCC and FDIC to withdraw this harmful proposal.”

The CRA was enacted in 1977 to tackle concerns around racially-driven redlining and disinvestment in low- and moderate-income communities after it was determined that banks were diverting investment funds away from the low- and moderate-income communities they served despite ample local lending opportunities. The CRA has worked to combat these issues by unlocking lending to small businesses and increasing access to affordable housing. Between 2010 and 2016, the CRA expanded the number of small business loans to underserved neighborhoods by 38 percent. In addition, the CRA is credited with facilitating between 15 to 35 percent of home loans to Latinos in low- and moderate-income communities. For multifamily rentals, the CRA has been instrumental in connecting banks with local organizations to work hand-in-hand on smaller, more involved projects that rely on state and local subsidies or public-private partnerships. The CRA has also incentivized banks to make bank accounts and other important financial products available to members of low- and moderate-income communities.

In the letter, Attorney General Stein and 21 other attorneys general urge the OCC and FDIC to withdraw the proposal because of fundamental flaws that run counter to the purpose of the CRA. The coalition asserts that the proposal:

  • Relies on arbitrary benchmarks in a CRA compliance rating system that ignores local realities.
  • Fails to appropriately downgrade banks’ CRA ratings when their actions harm low- and moderate-income communities.
  • Radically decreases the importance of physical locations of bank branches without fully determining if online services are fulfilling community needs.
  • Waters down bank obligations by expanding CRA-eligible activities, potentially gutting the important investment, loan, and retail services that banks currently undertake in low- and moderate-income communities.
  • Inflicts real-world harms on the states and their residents by undercutting affordable housing efforts.
  • Violates the law by putting forth arbitrary and capricious provisions that run contrary to Congressional intent in passing the CRA.

Attorney General Stein is joined in sending today’s letter by the Attorneys General of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Vermont, Virginia, Washington, the District of Columbia.

A copy of the letter is available here.

Laura Brewer (919) 716-6484


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