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Post date: November 20 2018

Attorney General Underwood – Part Of Coalition Of 14 AGs – Fights For Rules Protecting Vulnerable Populations From Banking Discrimination

News from the New York Attorney General's Office 

November 20, 2018

Attorney General's Office Press Office / 212-416-8060 


Trump Administration Has Moved to Weaken Oversight of Bank Compliance with the Community Reinvestment Act, Which Was Enacted to Prevent Redlining

NEW YORK – Attorney General Barbara D. Underwood – part of a coalition of 14 Attorneys General – filed a comment letter urging the Office of the Comptroller of the Currency (OCC) to maintain rules requiring banks to take steps to serve low- and moderate-income communities and protect against lending discrimination. The comment responds to the OCC’s efforts to weaken oversight of bank compliance with the Community Reinvestment Act (CRA). The CRA encourages banks to help meet credit needs of all segments of their communities. The law was enacted in 1977 in response to banks persistent and systematic denial of access to credit for historically disadvantaged communities, often communities of color, known as redlining. The OCC’s proposal would undermine the purpose of the CRA and result in less access to banking service, loans, and investment for vulnerable populations.

“All New Yorkers deserve equal access to banking, loans, and investment services. Yet this proposal would dramatically weaken banks’ obligations under the Community Reinvestment Act – undermining the very purpose of the Act and leading to disinvestment in our most vulnerable communities,” said Attorney General Underwood. “The federal government should be doing everything in its power to combat systemic discrimination – not make it easier. We’ll continue to fight back against this wrongheaded proposal.”

Three federal financial regulators enforce the CRA: the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the OCC. Enforcement is carried out through the bank examination process, where these agencies periodically review how well banks have met the credit needs of the communities covered by the CRA.

In the letter, the 14 Attorneys General urge the OCC to withdraw its proposal because the OCC:

  • Neglected to include the Federal Reserve and the FDIC in forming its decision to roll back CRA oversight, despite these regulators’ shared responsibility for implementing the CRA. 
  • Implemented guidance that would weaken enforcement of credit discrimination and consumer protection laws through the CRA. The OCC states it will only consider the most egregious of violations in determining what affects a bank’s credit rating, which functionally eliminates penalties for violations.
  • Proposes a rating system that removes examiners’ ability to qualitatively evaluate bank responsiveness to local credit needs.
  • Fails to recognize the importance of community benefit agreements, which have led to billions of dollars in local community investment.
  • Allows banks to achieve CRA compliance through lending and investments made in non-CRA communities.
  • Fails to fix the loophole that allows bank affiliates, such as mortgage lenders, to escape CRA examination.

The letter was signed by the Attorneys General of California, the District of Columbia, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, and Virginia.