LANSING, Mich. — Michigan Attorney General Dana Nessel has joined other attorneys general across the country in an effort to combat banking discrimination when it comes to affordable housing and small business financing.
A letter sent to the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) urges to withdraw a proposed rule "that threatens to undermine the Community Reinvestment Act (CRA) and Congressional efforts to combat banking discrimination."
According to Nessel, the CRA is a civil rights tool responsible for directing trillions of dollars in investments back to low- and moderate-income communities, and provides access to financial services and loans that incentivize the availability of affordable housing and support small businesses across the country.
“This proposed rule looks to remove safeguards that have been in place for decades and are intended to level the playing field for those in low- and moderate-income communities,” Nessel said. “This proposal would undermine the CRA, a program that provides critical resources to the people who need it most, and that’s reason enough to oppose it.”
The CRA was enacted in 1977 to tackle concerns around racially driven redlining and disinvestment in urban communities.
According to a news release, a study by the Senate Banking Committee at the time uncovered banks were diverting investment funds away from the low- and moderate-income communities they served despite ample local lending opportunities.
"For example, only 10 percent of money invested by District of Columbia residents was reinvested back in their communities. The same pattern was reported in neighborhoods across the country," a news release said.
The CRA has worked to combat these issues by unlocking lending to small businesses and increasing access to affordable housing.
The letter urges the OCC and FDIC to withdraw the proposal because of "fundamental flaws that run counter to the purpose of the CRA."
The attorneys general say 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 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.
Nessel filed the letter with attorneys general from California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, Washington and the District of Columbia.
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