The Community Reinvestment Act helps working class Philadelphians. Here’s how you can help save it.
At a time in which housing affordability has reached a crisis and small businesses are struggling to stay afloat, we must preserve and build upon the gains we have made and not allow a rollback.
The Community Reinvestment Act is a foundational pillar for creating access to opportunity by requiring banks to provide credit and investment to low-and moderate-income residents and communities. Importantly, it also provides criteria to evaluate whether banks meet these obligations.
If you care about affordable housing or economic development, if you care about access to credit for a family looking to buy their first home or start a small business, if you care about the strides we have made since the days of redlining when banks wouldn’t lend to these communities, then you should care about the Community Reinvestment Act (CRA).
For decades, the work of building a more equitable Philadelphia that prioritizes housing stability and economic mobility has been grounded in partnership. Community-based nonprofit organizations, government, and the private sector have worked together to increase opportunity and quality of life for the communities of the Delaware Valley.
This ecosystem was created through hard-fought advocacy and a recognition that government must both support the work to break cycles of intergenerational poverty while leveraging its regulatory power to prevent the private sector from exacerbating inequality.
However, a new federal rule proposed by two of the three federal banking regulatory agencies — the Federal Deposit Insurance Corporation and the Office of the Comptroller of Currency — risks jeopardizing this partnership.
These agencies exercise control over the Community Reinvestment Act and are attempting to make drastic changes that would undermine the progress we have made toward promoting equality in Philadelphia and the surrounding metropolitan area.
Pennsylvania could see an 80% reduction in Community Reinvestment Act lending and investments.
According to the National Community Revitalization Coalition, in the Philadelphia metro area, from 2010-2024, banks made more than $64 billion in CRA qualified mortgage lending to low- and moderate-income borrowers or in low- and moderate-income communities, and over $22 billion in CRA qualified lending to small businesses.
Across Pennsylvania, there has been more than $108 billion in CRA qualified mortgages and $48 billion in small businesses lending in the same period.
This proposed rule would, among other things, make many banks subject to a much lower degree of scrutiny, while exempting many others from its key provisions. It would broaden what qualifies towards a bank’s CRA obligations and degrade the connection to meaningful economic benefit to low- and moderate-income communities.
The proposal would also make it more challenging to hold banks accountable and eliminate key data sharing requirements that allow outside stakeholders like advocates and elected officials to understand whether resident needs are being met.
Were banks to adopt the lower targets proposed by the two regulators, Pennsylvania could see an 80% reduction in CRA lending and investments.
Members of the public can also make their voices heard by submitting public comments objecting in opposition to the proposal by the Oct. 13 deadline.
Should this proposed rule go into effect, it will set back our collective work to address economic mobility and housing instability in our region.
In particular, it will significantly undermine the goals of recently launched housing programs like Mayor Cherelle L. Parker’s H.O.M.E. Initiative or Gov. Josh Shapiro’s Housing Action Plan. This will happen in big, obvious ways like more challenging financing for affordable housing development and small, less obvious but no less insidious ways like a first-time homebuyer who has done everything right but doesn’t understand why they still can’t get a mortgage.
It will also mean less support for nonprofits doing the work on the ground to improve your community and provide a better quality of life for residents.
At a time in which housing affordability has reached a crisis and small businesses are struggling to stay afloat, we must preserve and build upon the gains we have made and not allow a rollback into a past where owning a home or starting a small business are placed out of reach for even more of our neighbors.
Now is the time for action: elected officials at all levels of government should take a stand (as Philadelphia’s City Council recently did) to express their opposition to the proposed rule.
Members of the public can also make their voices heard. We encourage you to submit a public comment objecting in opposition to the proposal by the Oct. 13 deadline. The Philadelphia Association of Community Development Corporations has created a template for you to do just that.
Just as the partnerships that have sustained this work did not emerge without effort, they will not endure without action. Take a stand and submit your comments in opposition to the new rule by Tuesday
Rick Sauer is the executive director of the Philadelphia Association of Community Development Corporations. Daniel Betancourt is the president and chief executive officer of Finanta.
