Attorney General Becerra Leads Effort to Defend Federal Regulations Protecting Underserved Communities from Banking Discrimination

SACRAMENTO – California Attorney General Xavier Becerra today announced leading a coalition of 22 attorneys general in filing a comment letter urging the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to withdraw a proposed rule that threatens to undermine the Community Reinvestment Act (CRA) and Congressional efforts to combat banking discrimination. The CRA is a critical civil rights tool that is responsible for directing trillions of dollars in investments back to low- and moderate-income communities. It also provides access to financial services and loans that incentivize the availability of affordable housing and support small businesses across the country.

“All Californians should have an equal shot at securing safe and affordable credit to maintain a business or buy a home. Your ZIP code shouldn’t dictate your chance to get ahead,” said Attorney General Becerra. “For years the Community Reinvestment Act has worked to level the playing field. So why now, when the COVID-19 pandemic has upended the well-being and economic livelihood of so many Americans, would the Trump Administration propose weakening the CRA’s standards? We’re calling on the Trump Administration to do what’s right and withdraw this flawed proposal.”

The CRA was enacted in 1977 to tackle concerns around racially driven redlining and disinvestment in urban communities. A study by the Senate Banking Committee at the time uncovered that banks were diverting investment funds away from the low- and moderate-income communities they served despite ample local lending opportunities. For example, only 10 percent of money invested by District of Columbia residents was reinvested back in their communities. The same pattern was reported in neighborhoods across the country. The CRA has worked to combat these issues by unlocking lending to small businesses and increasing access to affordable housing. Between 2010 and 2016, the CRA expanded the number of small business loans to underserved neighborhoods by 38 percent. In addition, the CRA is credited with facilitating between 15 to 35 percent of home loans to Latinos in low- and moderate-income communities. For multifamily rentals, the CRA has been instrumental in connecting banks with local organizations to work hand-in-hand on smaller, more involved projects that rely on state and local subsidies or public-private partnerships. The CRA has also incentivized banks to make bank accounts and other important financial products available to members of low- and moderate-income communities.

In the letter, the coalition urges the OCC and FDIC to withdraw the proposal because of fundamental flaws that run counter to the purpose of the CRA. The coalition asserts that the proposal:

• Relies on arbitrary benchmarks in a CRA compliance rating system that ignores local realities;
• Fails to appropriately downgrade banks’ CRA ratings when their actions harm low- and moderate-income communities;
• Radically decreases the importance of physical locations of bank branches without fully determining if online services are fulfilling community needs;
• Waters down bank obligations by expanding CRA-eligible activities, potentially gutting the important investment, loan, and retail services that banks currently undertake in low- and moderate-income communities;
• Inflicts real-world harms on the states and their residents by undercutting affordable housing efforts; and
• Violates the law by putting forth arbitrary and capricious provisions that run contrary to Congressional intent in passing the CRA.

Attorney General Becerra is committed to upholding antidiscrimination protections and furthering safe, affordable housing for those living in California and across the country. In 2018, he led a multistate coalition in filing a comment letter calling on the Trump Administration to drop its initial proposal to roll back protections under the CRA. Earlier this week, the Attorney General led a multistate coalition in an amicus brief standing up for antidiscrimination protections in federal contracts. Last month, Attorney General Becerra condemned a proposed rule that would roll back fair housing protections by gutting the Affirmatively Furthering Fair Housing rule. Earlier this year, the Attorney General intervened in a lawsuit to protect the state’s ability to address housing availability and affordability. In October of 2019, Attorney General Becerra opposed a federal proposal to make it more difficult to bring disparate impact claims, making many communities more vulnerable to structural and systemic housing discrimination. In September of 2019, the Attorney General highlighted the harmful effects of discriminatory lending practices in an amicus brief supporting the City of Oakland in a case against Wells Fargo. In July of 2019, Attorney General Becerra urged the U.S. Department of Housing and Urban Development to withdraw a proposed rule on housing assistance eligibility, which would leave tens of thousands of Californians at risk of eviction. Attorney General Becerra also joined a coalition of attorneys general seeking to protect federal rules allowing equal and consistent access to shelters for transgender and gender nonconforming individuals. 

In submitting the letter, Attorney General Becerra is joined by the attorneys general of Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, Washington, the District of Columbia.

A copy of the comment letter is available here.