Elizabeth Warren
09/16/2024 | Press release | Distributed by Public on 09/16/2024 15:36
Warren, Waters Slam Chamber of Commerce, American Bankers Association for Efforts to Block Community Reinvestment Act Reforms
September 16, 2024
Warren, Waters Slam Chamber of Commerce, American Bankers Association for Efforts to Block Community Reinvestment Act Reforms
Criticize Banking, Big Corporate Lobbying Organizations for "Meritless" Lawsuit to Stop New Rules to Prevent Banking Discrimination
"These rules must be updated, and your efforts to stop regulators from doing so are unjustified and harmful"
Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Chair of the Senate Banking Committee's Economic Policy Subcommittee, and Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, today slammed the Chamber of Commerce (Chamber) and the American Bankers Association (ABA) for their efforts to block necessary reforms to the Community Reinvestment Act.
"The banking industry has changed drastically since the last major update to the CRA in 1995, and the current, outdated rules are giving banks a free pass, allowing them to meet CRA standards even while engaging in the discriminatory practices the law was designed to stop. These rules must be updated, and your efforts to stop regulators from doing so are unjustified and harmful," wrote the lawmakers.
The Community Reinvestment Act (CRA), signed into law in 1977, was originally created to correct a history of racist lending practices by big banks, mandating that banks lend to all communities in which they are chartered to do business. The law established an examination process for regulators to regularly assess banks, ensuring they were lending to low- and moderate-income customers and investing in community benefit programs. In the letter, the lawmakers detail multiple key weaknesses in the original CRA, revealing an outdated rubric that requires reform.
"Using the old CRA rubric to assess whether banks are meeting their lending and community investment obligations is no longer sufficient to protect vulnerable communities from institutional discrimination," wrote the lawmakers.
To address these problems, banking regulators issued an Advance Notice of Proposed Rulemaking (ANPR) which offered updates to reform the law. The Chamber and ABA filed suit earlier this year.
In the new letter, the lawmakers criticized the lawsuit, writing: "Filing a meritless lawsuit against the rule that would modernize how we evaluate a bank's ability to serve the entire community … indicates the insincerity of the Chamber's and the ABA's purported commitments to the CRA's goals."
"The CRA must be updated to meaningfully address the discriminatory redlining that banks continue to engage in across the country [and to]... protect bank customers from discrimination," concluded the lawmakers.
Senators Warren and Representative Waters are leaders on efforts to strengthen the Community Reinvestment Act. Representative Waters led the Making Communities Stronger Through the Community Reinvestment Act, legislation to strengthen the Community Reinvestment Act and end modern-day redlining. Senator Warren's signature housing bill, the American Housing and Economic Mobility Act, includes provisions to strengthen the CRA.
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