Advocates: Crucial bank law softened under Trump proposal

Source: Associated Press


Ken Sweet and Christopher Rugaber, Ap Business Writers
Updated 2:02 pm CST, Wednesday, January 29, 2020

WASHINGTON (AP) — The Trump administration is proposing changes to a decades-old law designed to keep banks from discriminating against the poor and disadvantaged, but critics argue the changes could make it easier for banks to potentially ignore the under-served, particularly communities of color.

The Community Reinvestment Act has, over the past four decades, spurred hundreds of billions of dollars in lending to low- and middle-income communities. But it's out of date and in need of an overhaul.

Some community advocates say the changes the administration is proposing will allow banks to meet the law’s criteria without making the types of loans that are most beneficial to the communities they serve. Worse, critics argue that discrimination against poor and communities of color by the banking industry could increase under the proposal.

The Community Reinvestment Act was passed in 1977, when bank branches were one of the few ways to measure a bank's presence in a community. It was last revised in the mid-1990s, when online banking barely existed. There are now banks that have zero physical branches, making it more difficult to measure what constitutes a community under the law. It's become somewhat an inside joke in the industry of how many banks have chosen Salt Lake City — a place with a lot of banking operations but is not representative of the broader country — as their CRA assessment areas.


Read more: https://www.chron.com/news/us/article/Critics-Critical-bank-law-is-softened-under-15012555.php