Toledo Mayor Wade Kapszukiewicz released the following statement today 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 6-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.