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The City’s Concerns about the Proposed Community
Reinvestment Act
Special to The Truth
Toledo Mayor Wade Kapszukiewicz released the
following statement last week regarding proposed changes to
the Community Reinvestment Act:
The City of Toledo is deeply
concerned with the recommended changes to the Community
Reinvestment Act (CRA) that will weaken banks'
responsibility to provide adequate banking services to
low-to-moderate income communities. Weakening the CRA will
have a disproportionate impact on communities that bear the
brunt of concentrated poverty, racial segregation, declining
housing stock, and a lack of affordable housing.
Homeownership is still the greatest opportunity for wealth
accumulation. The lack of access to mortgage lending due to
discriminatory barriers has a significant impact on
communities of color and poor neighborhoods that are
perceived to be unworthy of investment. We believe our
community offers a great opportunity for families to build a
good quality of life. CRA is a meaningful and crucial
vehicle to create opportunity for community and economic
investment.
The lack of branch locations
also significantly increases the difficulty small businesses
face in securing loans. While business owners can travel to
other branches, research shows that the further the distance
between the firm and the bank, the higher the loan interest
rate. As a matter of fact, a 2014 MIT study shows that the
impact is hyper-local, within a six-mile radius of the
branch closure. For communities like Toledo, we depend on
the success of small businesses to attract and retain
employment opportunities. A declining branch network creates
an opportunity for predatory financial service providers to
prey on our residents and small businesses by filling in the
gap where traditional financial institutions have left a
void.
The proposed changes to the
CRA are a disincentive for banks to tailor products and
services to the needs of the local community and promotes
targeting the "low-hanging fruit," which tends to be upper
income communities that are predominantly white, to meet CRA
requirements. Over the past three years, deregulation has
benefited business and corporate interests over the very
citizens and communities that laws like CRA were designed to
aid. Instead of easing CRA regulation and enforcement, the
OCC and FDIC should partner with the Federal Reserve to put
teeth into CRA so that rural and urban communities, and the
hardworking families that reside in them, can access the
financial tools needed to secure their American dreams. We
should be holding banks - especially those rescued during
the 2008 housing crash with taxpayers' dollars - more, not
less, accountable for their obligations to the law and our
country.
The City of Toledo stands
with civil rights and consumer protection leaders on this
issue. The proposed rules weaken a compliance system that
needs to be strengthened, introduce new loopholes, and add
confusion and inconsistency, all while failing to address
the real changes needed to modernize CRA to respond to
changes in our country's demographics and changes in the
structure of the banking industry. We urge the FDIC and the
OCC to abandon this misguided approach and craft a new set
of proposals that will ensure that all communities have
access to safe, affordable credit, as the CRA intended.
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Copyright © 2019 by [The Sojourner's Truth]. All rights reserved.
Revised:
02/06/20 10:15:37 -0500. |
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