Text of Letter (PDF)

Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee and U.S. Senator Elizabeth Warren (D-Mass.), Chair of the Senate Banking Committee’s Economic Policy Subcommittee, slammed the Chamber of Commerce (Chamber) and the American Bankers Association (ABA) for their efforts to block necessary reforms to the Community Reinvestment Act.

“The banking industry has changed drastically since the last major update to the CRA in 1995, and the current, outdated rules are giving banks a free pass, allowing them to meet CRA standards even while engaging in the discriminatory practices the law was designed to stop. These rules must be updated, and your efforts to stop regulators from doing so are unjustified and harmful,” wrote the lawmakers.

The Community Reinvestment Act (CRA), signed into law in 1977, was originally created to correct a history of racist lending practices by big banks, mandating that banks lend to all communities in which they are chartered to do business. The law established an examination process for regulators to regularly assess banks, ensuring they were lending to low- and moderate-income customers and investing in community benefit programs. In the letter, the lawmakers detail multiple key weaknesses in the original CRA, revealing an outdated rubric that requires reform.

“Using the old CRA rubric to assess whether banks are meeting their lending and community investment obligations is no longer sufficient to protect vulnerable communities from institutional discrimination,” wrote the lawmakers.

To address these problems, banking regulators issued an Advance Notice of Proposed Rulemaking (ANPR) which offered updates to reform the law. The Chamber and ABA filed suit earlier this year.

In the new letter, the lawmakers criticized the lawsuit, writing: “Filing a meritless lawsuit against the rule that would modernize how we evaluate a bank’s ability to serve the entire community … indicates the insincerity of the Chamber’s and the ABA’s purported commitments to the CRA’s goals.”

“The CRA must be updated to meaningfully address the discriminatory redlining that banks continue to engage in across the country [and to]... protect bank customers from discrimination,” concluded the lawmakers.

Representative Waters and Senator Warren are leading in the effort to strengthen the Community Reinvestment Act. Among many other things, Representative Waters led the Making Communities Stronger Through the Community Reinvestment Act, legislation to strengthen the Community Reinvestment Act and end modern-day redlining (see more actions in “background” section). Senator Warren’s signature housing bill, the American Housing and Economic Mobility Act, includes provisions to strengthen the CRA.


Background:

On April 9, 2019, the Subcommittee on Consumer Protection and Financial Institutions convened a hearing entitled, “The Community Reinvestment Act: Assessing the Law’s Impact on Discrimination and Redlining.”

On December 12, 2019, then Chairwoman Waters led a delegation of the Committee in attending a public meeting of the FDIC’s Board of Directors where CRA was on the agenda.

The Members’ trip to the FDIC followed a December 11, 2019 letter sent to banking regulators led by Chairwoman Waters and then Consumer Protection and Financial Institutions Subcommittee Chairman Gregory Meeks (D-NY) and signed by all 34 Committee Democrats, along with all 12 Senate Banking Committee Democrats led by then Ranking Member Sherrod Brown (D-OH). The letter, addressed to FDIC Chairman McWilliams, Federal Reserve Chairman Jerome Powell, and OCC Comptroller Joseph Otting, calls on the regulators to, at a minimum, include a public comment period of at least 120 days for any proposal reforming CRA to ensure it gets a full vetting and that all interested parties have an opportunity to analyze and comment on the proposal.

On January 14, 2020, the Subcommittee on Consumer Protection and Financial Institutions, then chaired by Rep. Gregory Meeks (D-NY), convened a hearing with stakeholders testifying entitled, “The Community Reinvestment Act: Reviewing Who Wins and Who Loses with Comptroller Otting’s Proposal.”

On January 15, 2020, then Chairwoman Waters opened an investigation into potential astroturfing efforts to influence the OCC and FDIC’s CRA rulemaking, demanding the agencies explain efforts to ensure the legitimacy of the rulemaking process.

On January 29, 2020, then Chairwoman Waters convened a hearing entitled, “The Community Reinvestment Act: Is the OCC Undermining the Law’s Purpose and Intent?” with Comptroller Otting testifying as the sole witness.

On February 6, 2020, the Subcommittee on Oversight and Investigations, chaired by Rep. Al Green (D-TX), convened a hearing with stakeholders entitled, “Fake It Till They Make It: How Bad Actors Use Astroturfing to Manipulate Regulators, Disenfranchise Consumers and Subvert the Rulemaking Process.” As part of the hearing, witnesses discussed allegations that Comptroller Otting, when he was the CEO of OneWest Bank, may have been involved in fabricating comments in support of OneWest’s merger with CIT.

On February 24, 2020, in response to efforts by then Chairwoman Waters and Committee Democrats to ensure the public had enough time to provide comment on the OCC and FDIC’s Notice of Proposed Rulemaking to overhaul CRA regulations, the agencies announced a 30 day extension of the comment period.

On April 7, 2020, Chairwoman Waters led a letter signed by all other Committee Democratic Members to Comptroller Otting and Jelena McWilliams, Chairman of the Federal Deposit Insurance Corporation (FDIC), urging them to prioritize a strong response to the COVID-19 pandemic and suspend efforts to revise the Community Reinvestment Act and any unrelated rulemakings.

On June 29, 2020, the House of Representatives passed H.J. Res 90, a Congressional Review Act resolution of disapproval to nullify the OCC’s harmful Community Reinvestment Act rule introduced by Chairwoman Waters and Rep. Meeks.

On July 22, 2021, then Chairwoman Waters released a statement applauding the OCC’s decision to rescind the 2020 Community Reinvestment Act rule and work with the FDIC and the Federal Reserve to draft a new joint rule.

On July 13, 2022, the Subcommittee on Consumer Protection and Financial Institutions, chaired by Rep. Ed Perlmutter (D-CO), convened a hearing entitled, “Better Together: Examining the Unified Proposed Rule to Modernize the Community Reinvestment Act.”

On August 8, 2022, then Chairwoman Waters led a letter with 76 Democratic Members of the U.S. House of Representatives to the leaders of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency. The letter urges the regulators to consider carefully the comments they receive from civil rights and community groups as well as other stakeholders to their joint proposed rulemaking to modernize the Community Reinvestment Act (CRA) and work to finalize a strong CRA rule that will put an end to modern-day redlining.

On September 15, 2022, then Chairwoman Waters introduced the “Making Communities Stronger Through the Community Reinvestment Act.” This piece of legislation was a part of Chairwoman Waters’ continuing efforts to root out discrimination in our modern-day banking system and close the racial wealth and homeownership gaps by making key reforms to the Community Reinvestment Act.

On October 24, 2023, Congresswoman Waters released a statement following the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency’s final rule to strengthen the Community Reinvestment Act, which requires banks to lend to low- and moderate-income communities where they do business.

On June 18, 2024, Congresswoman Waters sent a letter to the Department of Justice and OCC, urging them to follow through on their consent orders relating to City National Bank’s redlining and discriminatory banking practices.

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