Fair, inclusive lending & investment for all Illinois communities

Enforcement

To enforce the IL CRA, IDFPR assesses how well each regulated entity –  banks, credit unions, and mortgage lenders – fulfills its obligation to provide accessible and responsible financial products and services to the communities they are chartered to serve, not excluding low- and moderate-income communities and individuals. IDFPR assign the entity a rating that is used to evaluate applications for future approval of bank relocations, mergers, consolidations, acquisitions, and assumption of liabilities..

Why It’s Important

The broader coverage of the IL CRA—oversight for credit unions and mortgage companies as well as banks—is key. National research by the federal Consumer Financial Protection Bureau shows that a majority of mortgages (an estimated 60 to 70 percent) are originated by residential mortgage brokers and credit unions. Now that SB3235 has been signed into law, the IL CRA is also the first state CRA to have an express equity tool in the form of a disparity study.

Status Updates

The Illinois Department of Financial and Professional Regulation (IDFPR) issued a preliminary proposed rule to implement the IL CRA in 2021, and the IL CRA Coalition worked to educate community members and to organize comments on this new Illinois law. 

On December 16, 2022, IDFPR released proposed rules for the implementation of the IL CRA. The IL CRA Coalition organized supporters from across the state to submit comments, and shared recommendations to ensure that the implementing rules for the IL CRA create an effective, strong tool for furthering equitable access to capital and financial inclusion.

The rules as proposed in December of 2022 were not implemented and a new set of proposed rules was released on January 5, 2024. The IL CRA Coalition submitted comments in response to the 2024 proposed rules, and shared recommendations with IDFPR.

On May 1, 2024, IDFPR adopted final rules for the implementation of the IL CRA. We are currently reviewing the final rules and will be creating community resources for understanding and taking advantage of the IL CRA in the coming months.

Enforcement

To enforce the CRA, three federal regulatory agencies⁠—the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve System⁠—assess how well each regulated bank fulfills its obligation to provide accessible and responsible financial products and services to the communities they are chartered to serve, not excluding low- and moderate-income communities and individuals. The regulators assign the bank a rating that is used to evaluate applications for future approval of bank mergers, charters, acquisitions, branch openings, and deposit facilities.

Why It’s Important

The federal CRA’s importance has become even more clear as COVID-19 lays bare the inequities that already existed in urban, suburban, and rural communities, with higher infection rates and occurrences of other health issues in historically redlined neighborhoods. After George Floyd’s murder and the resultant social justice protests, the IL CRA Coalition brought together a group of 39 partners and allies to send a letter urging federal banking regulators to use the CRA to address structural racism embedded in the financial system.

Status Updates

In May 2020, the OCC proposed a harmful rule that would have shifted billions of dollars away from communities that already struggle with disinvestment, racism, and economic disruption. The OCC adopted this rule on its own, without the sign-on of the Federal Reserve and the FDIC, and despite widespread criticism. The IL CRA Coalition organized supporters across our state and joined others nationally to speak up against the 2020 rule.

In 2021, the Federal Reserve Bank released a preliminary proposal to update the rules by which they hold banks accountable. The IL CRA Coalition again organized supporters to submit comments, and shared recommendations in a joint letter, calling for the CRA evaluation process to include an explicit focus on promoting racial equity, among other items.

In December 2021, the OCC fully rescinded its controversial rule and signaled an intent to work jointly with the other banking regulators to adopt a clear, strong, and consistent update to the CRA.

On May 5, 2022, the three federal regulators released a proposed joint rule. The IL CRA Coalition again organized supporters to submit comments, and shared recommendations in a joint letter with the federal regulators.

On October 24, 2023, the three federal regulators released updates to the federal CRA rules, which were published in the Federal Register on February 1, 2024.

In response to a lawsuit filed by the American Bankers Association, the U.S. Chamber of Commerce, and others, a U.S. District Court for Northern District of Texas halted implementation of the new rules pending a legal review. That case is on-going on. See Texas Bankers Association, et. al., v. Office of the Comptroller, 2:24-CV-025-Z-BR (N.D. TX).

We continue to monitor the situation and are preparing preliminary community resources for understanding and taking advantage of the federal CRA.