Banking regulators have proposed the first changes to the Community Reinvestment Act (CRA) in more than 25 years to increase lending in low- and moderate-income communities.
CNBC reports that the changes would adapt the CRA’s approach to ensuring banks don’t engage in red lines or racial discrimination in housing. The law was passed in 1977 and updated in 1994, but it has rarely stopped real estate agents and banks fto discriminate in housing.
“The CRA is one of our most important tools for improving financial inclusion in communities across America, so getting it right is critical,” Lael Brainardthe vice chairman of the Federal Reserve, told CNBC.
“It assesses bank engagement across geographies and businesses to ensure ARC is effective in supporting a robust and inclusive financial services sector.”
The amendments will implement clear public criteria for the assessment of banks. They will also allow smaller banks to continue operating under the previous rules.
Big banks have opposed changes to the CRA for years, arguing that the new rules will add significant costs to their bottom line and that they go too far.
Member of the Federal Reserve Michael Bowman said she is generally open to changes at the CRA, but expressed concerns about the proposed changes. One of the issues she cited is that banks with assets over $10 billion would be subject to multiple disclosure requirements regarding auto loans, mobile and online banking, and community development funding.
The proposal will be open for public comment through early August, with the expectation that the new rules will take effect several months after they are published in the Federal Register.
Although banks and real estate agents may not want to admit it, redlining is an ongoing problem today.
In 2019, press day discovered widespread housing discrimination by real estate agents on Long Island. The survey analyzed more than 5,000 Long Island real estate listings and conducted interviews with more than 90 real estate agents. the weather. Black men and women experienced discrimination almost half the time (49%).
Additionally, a Bloomberg investigation found Wells Fargo bank rejected half of its black applicants trying to refinance their mortgages during the COVID-19 pandemic to lower their payments. The situation led to a class action lawsuit against the bank.