Opinion

Making CRA changes during pandemic is disastrous to communities

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The Community Reinvestment Act was signed into law more than 40 years ago, and remains critical today to ensure banks address the credit needs of the communities they serve, particularly low- and moderate-income ones.

NeighborWorks America is also more than 40 years old, and we were created to help ensure investment flowed to all communities. We can absolutely say that the CRA is a critical tool that has helped stabilize, strengthen and maintain healthy communities.

On April 8, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. closed a public comment period on changes to the CRA.

The law needs revisions to accommodate the realities of the modern financial system and the regulatory environment. NeighborWorks America has concerns about the underlying proposal itself, and we are convinced that now, as the nation struggles with pandemic response and hopes for stabilization and recovery, is not the time to make major changes in any regulation, let alone the CRA.

When health and economic crises strike, lower-income communities experience the most severe consequences. The COVID-19 pandemic is causing turmoil for individuals and families in myriad ways, including the uncertainty of unemployment, mortgage and rent payments. Because it may be impossible to accurately account for the unprecedented nature of this situation in the regulations, reconsidering the proposal to revise and instead delay implementation of a new CRA rule during this time of economic turmoil could play a critical role in safeguarding communities.

NeighborWorks America’s network of nearly 250 community development organizations across every state, the District of Columbia and Puerto Rico are continuing to provide critical services to the people who need them most during the COVID-19 pandemic. Network organizations are preparing to respond should an outbreak occur in their residential properties, especially for housing developments targeting seniors or other special needs populations who may be at higher risk.

Network organizations anticipate there may be increased need for financial education, eviction prevention and foreclosure mitigation as low-income households try to maintain housing stability in the face of significant income loss. Additionally, there are reports of COVID-19 scams, so stressing the importance of getting information out through trusted sources such as NeighborWorks network organizations is essential.

Adjusting to a change in rules now during these unprecedented times could be detrimental to the help our network provides. Further, months from now, the COVID-19 situation could worsen and any disruption in service delivery or accommodations could be disastrous.

NeighborWorks America is committed to helping our network continue its critical work. We provided an immediate $20,000 emergency operating grant to each network organization to ensure that the families, communities and partners that rely on us have the tools and resources they need.

Similarly, financial institutions should focus on how to help communities during COVID-19, not how to adjust to new regulations. Banks, Community Development Financial Institutions and other reinvestment partners are critical economic first responders both in decreasing the financial harm to people and businesses and then helping their recovery. Banks and their community partners are rightly preoccupied with responding to the COVID-19 public health crisis and its many economic and financial consequences.

NeighborWorks America's recent public comment letter to the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. highlights how CRA is a critical framework for ensuring that the low- and moderate-income people that NeighborWorks America serves have access to the financial tools and resources they need. Reproposing a CRA rule sometime in the future and delaying implementation for several years is necessary to help NeighborWorks America and our network of strong nonprofits impact people's lives.

Now more than ever, we must use this important statute to confirm that credit and investment get to all communities to stabilize markets and create economic opportunities. One of the most significant lessons from the response to the foreclosure crisis during the Great Recession was that in times of economic distress partnership and collaboration between banks and community development organizations, like NeighborWorks organizations, is key. The risk to communities is too great; we must remain focused on urgent issues related to the COVID-19 response.

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