The exposed roots of a dead tree on the bank of a river.
Image Credit: Clint McKoy on

“We know that redlining and segregation was not just a phenomenon that has to do with banks,” Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said. “Institutional racism means that many institutions were implicated in the creation of the system that we have today—governmental, academic, corporate, and medical institutions alike.” Van Tol made these remarks at a keynote address to 1,200 attendees at this spring’s NCRC annual conference in Washington, DC. This year’s event was easily the group’s largest since before the COVID-19 pandemic.

The conference brings together hundreds of community activists, government officials, and bank community development officers. It’s an odd mix, but one that NCRC has managed for the past 33 years. The speakers this year provided some valuable windows into the persistent gaps between racial justice pledges and action, and some ways to possibly break the logjam.

Community Reinvestment Strengths and Shortfalls

NCRC was formed in 1990 to defend the 1977 Community Reinvestment Act, a law created to undo the structural racism embedded in redlining. CRA created an “affirmative obligation” for banks to invest in low- and moderate-income communities. The law was created explicitly in response to redlining—a system of drawing red lines on bank maps (or red shading), ostensibly to indicate neighborhoods that represented higher investment risk, developed during the New Deal when the federal government began to guarantee mortgage loans.

To assess risk, the newly formed Federal Housing Administration hired the University of Michigan’s Ernest Fisher and Prudential’s Frederick Babcock. The maps made by the Fisher and Babcock appraisal teams were supposed to focus on limiting the federal government’s exposure to mortgage losses. But not surprisingly, racist assumptions about risk made their way into red lines on maps, creating in the process de facto “do not lend” zones in low-income communities and communities of color. These maps continued to govern bank lending until the passage of the Fair Housing Act of 1968. The CRA, while falling short of ending inequities in lending, has been effective in many respects, generating tens of billions of dollars annually of bank investment in neighborhoods that had been historically denied access to credit.

A core weakness in CRA enforcement is the failure of regulators to consider race.

Additionally, due to the activism of NCRC and its members, community groups have often successfully mobilized to obtain additional commitments, particularly in exchange for community support of mergers. For example, earlier this year NCRC announced a five-year, $50 billion community benefits agreement between TD Bank and over 50 community groups. This is the latest of 27 such agreements that NCRC and its coalition partners have negotiated, resulting in an estimated $639 billion in commitments since 2016.

As Van Tol has indicated, however, at least half of the pledged amount typically represents loans and investments that banks would make even in the absence of such agreements. Even though billions in net new resources do result from these accords, it’s clear that agreements with banks are not enough.

Moreover, a core weakness in CRA enforcement is the failure of regulators to consider race. Caitlin Young, an Urban Institute policy analyst, points out that even today as reforms to strengthen the CRA framework to cover more communities are actively considered, the three leading federal regulators have once again shied away from proposing the race-conscious policies that advocates have promoted. As Young laments, “by declining to directly consider race in bank evaluations under the CRA, the regulators haven’t maximized their opportunity to turn the tide on racial homeownership, entrepreneurship, and wealth gaps.”

Flying Blind in Small Business Data

“Flying blind.” That is how Rohit Chopra, who directs the Consumer Finance Protection Bureau, described federal administration of the Paycheck Protection Program in his conference address. PPP was the leading program authorized by Congress to preserve small businesses during the 2020 economic shutdown. As Chopra explained, “There was little viable data from lenders on how funds were being dispersed to applicants. Problems were tough to spot. And it was extremely difficult to identify the areas that were most in need.” Demographic questions, Chopra noted, were not part of the first round of PPP applications in which nearly $500 billion was disbursed.

Absent such accountability, banks lent to their traditional customers, which were mostly White-owned businesses. As a Brookings Institution report concluded, “Neighborhoods of color with the most cash-constrained small businesses received PPP loans last.”

Of course, this was during an emergency. What is perhaps even more remarkable is that it was only in March 2023 that Chopra’s agency promulgated its so-called “Section 1071” rule requiring lenders to report demographic data on their small business lending.

The rule refers to Section 1071 of the Consumer Financial Protection Act, the law which created the CFPB in 2010. It took 13 years—and a lawsuit filed by the California Reinvestment Coalition, a member of the NCRC network—to push the agency to implement a rule to enforce the law.

According to Chopra, “Through our new rule, the CFPB will over time, make data public, to give local communities investors, governments, all of you deeper insights into the trends of small business lending across America. And it’s going to help deter illegal discrimination, which is very important.”

“I think everybody…knows more and more sectors of the economy are dominated by a handful of giants, run by a small clique of people.”

It will be some time yet, however, before that will be the case. According to the timeline laid out in the new rule, data collection for large lenders must commence in October 2024. A complete phase-in for all lenders making 25 business loans or more will not take effect until January 2026.

When data is collected, follow-through will be important. There is a lot at stake, given the nation’s large racial wealth gap in business ownership. While BIPOC-owned businesses are common, they are generally smaller than average. This can be seen in payroll figures. According to recent US Census data, about one in five businesses is BIPOC-owned. But the same report indicates that BIPOC businesses have a total payroll of $357.4 billion, which works out to only 4.9 percent of the $7.3 trillion payroll of US businesses overall. With public vigilance, the Section 1071 data will likely push financial institutions to adopt more equitable lending practices.

Chopra noted that the drivers of the racial wealth gap extend far beyond the scope of the agency he directs: “I think everybody in this room knows more and more sectors of the economy are dominated by a handful of giants, run by a small clique of people who are not always responsible or accountable. Over the years we have seen relentless consolidation as supermarkets, airlines, hospitals, telecommunications firms, pharmacies, agricultural companies, tech companies, and more merged within their respective industries to become bigger and more powerful.”

Changing the Narrative

Most of the keynote speakers were, like Chopra, government officials, which is perhaps not surprising given NCRC’s focus on influencing financial regulation.  But two of the most engaging keynote speakers were journalists: Jelani Cobb and Emily Flitter. Cobb, Dean of the Columbia University Journalism School, was interviewed as part of a live podcast in front of conference attendees.

“When you treat things that are unequal as if they are equal, you don’t serve your purpose in terms of giving the public information that’s useful to them.”

The school’s Uncovering Inequality project, released in March 2023, produced a set of five academic papers that look at racial inequality in housing, education, healthcare, criminal justice, and economics. Now, Cobb said, comes the hard work, which is translating the research into journalistic practice.

As Cobb puts it, the reports become useful to the extent that they are used: “You could report out the things that are in the story. You could take this information and apply it to stories that you’re already doing. We simply want you to use this knowledge.” Cobb adds that, “what we were trying to do at Columbia Journalism School [is] reframe the parameters of the conversation around racial inequality.”

Cobb also called on journalists in the field to use the data to avoid the common journalistic two-sided tendencies. As Cobb puts it, “Evenhandedness is not necessarily a virtue.…When you treat things that are unequal as if they are equal, you don’t serve your purpose in terms of giving the public information that’s useful to them about their lives.”

Emily Flitter, an author and financial reporter at the New York Times, spoke about her book The White Wall: How Big Finance Bankrupts Black America, on racism in the financial services industry. In the book, Flitter examines customer profiling, racist personnel practices (such as steering high-commission investors to White staff), and insurance discrimination. Flitter also critiques the common corporate practice of announcing “racial equity commitments.” Flitter argued that the focus should be for corporations that are serious about advancing racial justice to evaluate “[what they are] doing that could be contributing to the racial wealth gap and say, ‘Forever after, we will change this practice and do better. And this is how we crunched the numbers on how it’s going to close the racial wealth gap.’ No one is doing that.”

Moving Forward

The conference, in short, aimed to connect struggles in the bank regulation policy trenches with the broader movement for racial and economic justice. At the conference, Van Tol unveiled the top themes of NCRC’s new five-year strategic plan, which are:

  1. Build the will to overcome economic inequality and racial inequity.
  2. Organize, train, and support a powerful and influential coalition.
  3. Drive institutions to invest, serve, and support the creation of wealth by people and communities with low wealth.
  4. Build wealth and assets for low-wealth people and communities.
  5. Create sustainable and significant staff capacity.

Van Tol conceded that a strategic plan is just “meaningless talk—unless it produces outcomes on the ground and communities across the nation.” He added that, “None of what we say or do matters if it doesn’t help close the racial wealth divide and help more people in more communities to access opportunities that since the nation’s founding had been distributed unevenly and unfairly,” a task that requires deep community organizing.

This theme of community mobilization resonated with many speakers at the conference’s breakout sessions. At one of those, a panel on changing perceptions of “risk” in communities of color, Rudy Espinoza of Inclusive Action for the City noted that this work requires not just building the field of community finance, but also an investment by field leaders in advocacy. As Espinoza put it, “Are we supporting tenants in our cities? Are we participating in campaigns to support more affordable housing? Lenders and folks in economic justice—we have a very important position. People are coming with us with all their needs. It is a disservice if we don’t share their stories.”