NAACP Chairman Warns Against Weakening Community Reinvestment

Julian Bond, Chairman, National Association for the Advancement of Colored People (NAACP) Board of Directors, said proposed changes in the Community Reinvestment Act will result in "significantly fewer loans and investments in affordable rental housing, health clinics, community centers, and economic development projects."

Bond said the NAACP joins other community groups in efforts to persuade the CRA to withdraw their proposal to increase small bank performance requirements to $500 million from $250 million which could prove harmful to underserved communities.

Under the new requirements, banks with over $250 million in assets must be tested on their number of loans, investments, and services to low- and moderate-income communities. The changes would allow mid-sized banks to choose only one community development activity they will undertake, resulting in significantly less community development activity.

The proposal also suggests that all community development activities in rural areas should benefit any group of individuals, regardless of income. This will allow banks to discern and focus on affluent residents of rural areas rather than the lower income consumers CRA targets, possibly eliminating publicly available data on the small business lending of mid-sized banks.

Without data, community groups and citizens cannot hold banks accountable for lending to small businesses in their neighborhoods, Bond says. The NAACP is calling for consistency in the implementation of proposed changes to the CRA program and reemphasizes their responsibility to encourage depository institutions to help meet the needs of communities in which they operate.

The officer of the Comptroller of Currency (OCC) and the Board of Governors of the Federal Reserve Board (FRB) have withdrawn proposals to increase the requirements being pursued in the proposal and are calling for other agencies to join community groups in changing proposed CRA regulations.

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