Until the passage of the Fair Housing Act in 1968, redlining—that is, the drawing of red lines on maps around “do not lend” zones in low-income communities and communities of color—was legal. After 1968, it no longer was, but it took the passage of CRA (Community Reinvestment Act) nine years later to establish a legal affirmative obligation of banks to reverse the impact of decades of exclusion.

The law came about due to a multi-year community organizing campaign led by Gail Cincotta, a resident of Chicago’s Austin neighborhood and a cofounder of National People’s Action (now People’s Action). Writing for NPQ three decades later, the late Rick Cohen labeled the measure “one of the nonprofit sector’s biggest advocacy triumphs.”

The design of CRA is straight-forward. As Miriam Axel-Lute explains in Shelterforce,

Under CRA, depository banks are evaluated…based on their market footprint. The evaluations look at their retail services (branches, appropriate products), lending to low- and moderate-income (LMI) individuals and businesses, and their community development investments, which include things like equity investments in affordable housing development and support for organizations providing credit, development, and services in LMI communities.

Banks are also allowed to negotiate five-year agreements with community organizations that create bank regulator-approved strategic plans in lieu of the examinations. Importantly, the evaluation process creates the opportunity for community groups to testify at bank hearings.

The importance of CRA in pushing banks to lend in neighborhoods that they had previously neglected has been amply demonstrated. A 2019 study from the Joint Center for Housing Studies at Harvard University, for example, found “consistent evidence that the CRA promotes small business lending, especially in terms of number of loan originations, in lower-income neighborhoods.”

Nonetheless, efforts to whittle down CRA regulations regularly occur. Writing at one of those times in March 2020, Axel-Lute noted that, “The Community Reinvestment Act, or CRA, is so much a part of the landscape of community development that when it is not under threat, we almost take its pivotal role for granted.” 

The 2020 CRA tussle was only the latest of a series of attempts that have been made to weaken CRA regulatory language. Out of the successful campaign to preserve CRA in 1990, the National Community Reinvestment Coalition (NCRC) was born. Initially comprised of 16 local, regional, and national groups, some of which—including the National Low Income Housing Coalition, Local Initiatives Support Corporation (LISC), Community Change, Enterprise Community Partners, and the NAACP—remain prominent today, the group’s membership has expanded to include 620 member organizations across 44 states.

Over time, in large measure because of the efforts of NCRC and its members, the scale of bank CRA lending commitments dramatically expanded. Most often, these commitments come in response to mergers—with a commitment to boosting lending typically greasing the wheels to get regulatory approval for acquisitions.

A summary produced by the FB Heron Foundation notes that bank CRA commitments had increased from $6.4 billion in 1990, back when NCRC was formed, to over $1 trillion by 2000. By 2017, that figure had climbed to over $6 trillion, according to one NCRC estimate. It all sounds very impressive. And yet if one looks under the hood, some shortfalls are obvious—such as the fact that the homeownership rate for Black Americans in 2021 is essentially unchanged from when CRA passed, decades ago.


What Bank CRA Commitments Tell Us—And Don’t Tell Us

Jesse Van Tol, who is CEO of NCRC, cautions that those trillion-dollar figures can be deceptive, since they include unilateral bank commitments that often lack follow-through or restate already committed dollars.

Here is an example of how this can play out: in 2004, then Bank of America CEO Ken Lewis testified to the Federal Reserve at a hearing on the bank’s acquisition of FleetBoston that “starting in 2005, the new Bank of America will set a community development lending goal of $750 billion over ten years, once again setting a higher standard for community development banking in our country” (page 19).

Tracking of these large-scale, megadollar commitments is often loose. In Bank of America’s case, it’s unclear if the bank met its $750 billion lending goal. But what is known is that during that decade, federal regulators opted to downgrade Bank of America’s CRA rating from “outstanding” to “satisfactory” in 2014—an exceedingly rare event. As Adam O’Daniel of the Charlotte Business Journal reported at the time, the bank was penalized for a host of illegal credit practices conducted by Countrywide, a subprime lender that Bank of America had acquired in 2008.

The Bank of America story, in short, is one where the benefits of its CRA commitments, even if they were honored, were more than offset by asset stripping elsewhere at the bank—a symptom of a larger problem. Nationally, as a 2013 research brief from the Institute on Assets and Social Policy at Brandeis University reports, “half the collective wealth of African American families was stripped away during the Great Recession due to the dominant role of home equity in their wealth portfolios and the prevalence of predatory high-risk loans in communities of color. The [Latinx] community lost an astounding 67 percent of its total wealth during the housing collapse.”

These days, NCRC looks at CRA numbers rather differently. Over the past five years, community groups backed by NCRC have negotiated bank commitments with 14 mid-sized banks that total $384 billion. This, Van Tol explains, “represents both their existing run rate—what was the institution doing before the agreement—plus increases.” The amount of increase varies significantly—it can still mean a doubling of investment in some cases. All told, community investment spurred by these 14 deals resulted in “$70 to $80 billion in net new activity,” which is “still a really big number.”

Some of these agreements—which NCRC now calls “community benefit agreements” (CBAs), rather than CRA commitments, to reflect the coalition’s broader community-building focus—are better than others. And some banks are better at honoring their commitments. An agreement with Key Bank, Van Tol notes, resulted in that bank doubling its philanthropic commitment from $85 million over five years to $175 million, and prompted the bank to invest more heavily in community development financial institutions (CDFIs). Fifth Third Bank, based in Cincinnati, “has built not just a more sophisticated community development program where they partner with CDFIs, community investment fund, Opportunity Finance Network, and others.” An agreement with M&T spurred that bank to double its procurement from BIPOC-owned firms from six percent of overall spend to 12 percent. Van Tol adds that a follow-up study focused on Cleveland, Ohio, found “massive increases in their mortgage lending” at Huntington Bank”—with whom an NCRC-backed coalition inked a new five-year, $40 billion agreement earlier this year—but more modest increases at other banks.


Radical Incrementalism

The Huntington agreement, Van Tol points out, is not the only one coming up for renewal. This, Van Tol adds, raises new questions, such as: “How do we follow through?” The goal, he explains is to create an “ethos of incremental improvement over time. We know the banks can do better in the CRA space and racial equity space.”

Van Tol speaks often of his favored approach as involving “radical incrementalism.”  The short-term gains, insists Van Tol, are critical in building the “hope and optimism and belief and all of the things that you need to bring people together.”

One movement gain in recent years, Van Tol emphasizes, has been that community benefit agreements are now an expectation of banks and regulators. The pace of agreements has increased in recent years, even though the Trump administration was hostile to CRA. The fact that community agreements are now an industry norm “shifts the whole starting point” of negotiations with banks, Van Tol points out.

At the same time, Van Tol recognizes that the power-building work continues, and community monitoring of implementation needs to be improved. The community benefit agreements that NCRC and its community partners negotiate now routinely include follow-up provisions, such as community advisory councils. These typically meet two to four times a year and come with a requirement that a majority of council members must be named by community groups.

Over time, Van Tol adds, “we have gotten more prescriptive. Our agreements now really write in more of an expectation around reporting and reporting format. In early agreements, it was left to mutual agreement how we would receive reports.” The problem of follow-through persists, nonetheless. Some key questions that should be asked at the end of the agreement, but too often still aren’t, include: Did the bank keep its commitment? What did it learn? And what does it plan to do next?


Building Power for Racial and Economic Justice

As Van Tol observes, a weakness at the heart of CRA is that even though it was passed in response to redlining and related, primarily race-based, discrimination, CRA bank examiners focus on investment in low-and-moderate income communities—and scarcely consider race. The compromise, Van Tol says, may be “part of the reason that CRA has endured.” But, as a recent NCRC paper explains, the failure to use race-conscious criteria to evaluate bank performance harms the ability to achieve the central aim of CRA—namely, ending race-based lending discrimination.

In response, community reinvestment advocates are adopting multiple strategies. One involves public policy. In addition to advocating for race-conscious measures of impact, this includes pressing for an expansion of the scope of CRA to include non-bank mortgage companies that now originate the majority of home loans and support for a measure authored by Senator Elizabeth Warren (D-MA) and Representative Chuy Garcia (D-IL) that would create a public interest test for bank mergers.

A second strategy involves coalition building. “For a long time, we thought the answer to addressing racial equity in America was to strengthen CRA and make race more explicit. Now we would say there are a lot of things we would do, and CRA is one component.” In 2021, after broad consultation with the community organizations that constitute its membership, NCRC released its “Just Economy Pledge,” which outlines a broad set of principles that extend far beyond CRA to include positions that call for ending mass incarceration to support for local democratic media and support for a universal basic income.

It’s not just about policy positions, though. Van Tol has spoken often about how “brilliant followership” is as important for movement success as leadership. “We used to want to lead everything, or we would not be involved. Even in our own community benefit agreements, we’ve started to think about shared leadership, shared power.” Van Tol added that in the organization’s upcoming strategic plan, “You’ll see from us an even greater emphasis of where we align with others and how we support the work and achieve brilliant followership.”

Van Tol adds: “We are focused on how to build power: How do you shift the narrative and change systems?” His answer to his own question: “My theory is that we have to keep plugging away. We have to be pessimistic in the short term and optimistic in the long term, persistent and insistent about making change.”

Van Tol sees some cause for optimism. A decade ago, he points out, “hardly anybody was talking about the racial wealth gap.” Still, the obstacles ahead remain daunting: “Whatever economic analysis you have, you have to bring an analysis of power with it. Accumulated wealth is accumulated power, and it is incredibly difficult to correct for that.”

CRA has its shortcomings, but its core strength, Van Tol contends, lies in its emphasis on citizen participation. “It creates power for community organizations or any citizen to have a say about how a bank is serving the community. That’s the kind of structure we should be thinking about in other ways. It creates power, tension, long-term pressure”—a policy design, he adds, that could have widespread applicability in empowering community stakeholders throughout the economy.