For about five decades, the Community Reinvestment Act (CRA) has helped address systemic inequities by providing access to credit, attempting to prevent redlining, and encouraging financial institutions to meet the credit needs of all communities, especially those of low- and moderate-income communities, while also ensuring safe and sound operations of the financial institutions accountable to it.
The last comprehensive interagency revision to the CRA regulations happened in 1995, and in the fall of 2023, after a process of feedback from commenters and expert research, the CRA has been updated with a final rule to enhance financial inclusion by supporting bank activities with Minority Depository Institutions and Community Development Financial Institutions, Native Land Areas, persistent poverty areas, and other high-need areas. While the changes are a significant improvement to the law, some economic justice advocates argue that the changes could more explicitly address race, rather than just income, so that the CRA more intentionally functions to close the racial wealth gap that has been caused and perpetuated by redlining and mortgage and small business lending discrimination.
Most of the new requirements become applicable beginning January 1, 2026 through January 1, 2027, so asset building funders have a unique opportunity to understand and strategically align funding with the new rules in order to make financial prosperity possible for all people.
On March 13, 2024 at 1pm EDT we heard a short overview of the new rule and its potential applications by Jesse Van Tol, President & CEO of the National Community Reinvestment Coalition. Together we:
• Learned about specific changes in the rule that create more opportunities for asset building.
• Explored ways place based and national funders can partner with and collaborate with CRA regulated institutions and how CRA regulated institutions can partner with private philanthropy to maximize impact
• Discussed ways to support funders, financial institutions, and practitioners in strategically activating these changes and filling the gaps
Resources
Jesse Van Tol Bio – https://ncrc.org/jesse-van-tol/?mc_cid=057818205b&mc_eid=9055528c7b
National Disability Institute’s Center for Disability-Inclusive Community Development (CDICD) – https://www.nationaldisabilityinstitute.org/cdicd/
Banking Deserts Resources- https://fedcommunities.org/data/banking-deserts-dashboard/
