Investing in Our Communities
Controlling access to quality, affordable homes has underpinned racism for far too long, in far too many ways. Redlining in the 1930s denied Black and other minority households access to home mortgages and drew community lines along racial boundaries that still exist today. Individuals and families continue to be denied rental housing because of their race.
Government and private investments and policies continue to generally benefit majority white communities over other communities. This has to change.
A key part of making that change is protecting, strengthening, and modernizing the federal Community Reinvestment Act (CRA), as well as passing complementary legislation, such as the Illinois Community Reinvestment Act (IL CRA), which Housing Action Illinois successfully advocated for alongside Woodstock Institute and our allies in 2021. As one of the leaders of the IL CRA Coalition, Housing Action Illinois aims to leverage both the federal and state CRAs in pursuit of more equitable investment in our communities.
In the 1930s, the Home Owners’ Loan Corporation (HOLC) created “Residential Security” maps. Neighborhoods considered high risk were “redlined” by lending institutions, denying them access to capital investment which could improve the housing and economic opportunity of residents.
What is the federal CRA?
The federal Community Reinvestment Act (CRA) was passed in 1977 in response to discrimination known as redlining and the systematic lack of investment in communities of color.
CRA requires banks to meet the credit needs of the communities where they do business. Discrimination in lending is still a problem, and CRA is a critical tool for promoting financial investment in low-income communities, especially disinvested communities of color, and for the minority-owned small businesses in these areas.
How does it work?
The federal CRA makes wealth-building more accessible through responsible homeownership opportunities, investment into the development of affordable multi-family housing, basic banking services, support for neighborhood revitalization and stabilization, and community services such as child care, educational or health or social services, and capital for small businesses.
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 Bank—assess how well each regulated bank fulfills its obligations to the low- and moderate-income communities where they do business. The regulators assign the bank a score that is used to evaluate applications for future approval of bank mergers, charters, acquisitions, branch openings, and deposit facilities.
Protecting, Strengthening, & Modernizing the Federal CRA
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. Unfortunately, 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.
Housing Action Illinois joined with partners across our state and nation to mobilize Illinois allies in speaking up against the 2020 rule. We spread the word about what was happening and organized formal comments of opposition, and in the wake of George Floyd’s death, we united with 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.
In December 2021, the OCC fully rescinded the 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.
Meanwhile, also in 2021, the Federal Reserve Bank released a preliminary proposal to update the rules by which they hold banks accountable. Housing Action Illinois helped other organizations to submit comments, and shared our own recommendations in a joint letter, calling for the CRA evaluation process to include an explicit focus on promoting racial equity, among other items.
Thank you to everyone who spoke up alongside us; stay tuned for opportunities to take action on additional CRA rulemaking in 2022.
What is the Illinois Community Reinvestment Act (IL CRA)?
The IL CRA compliments the federal CRA by providing oversight for state-regulated financial institutions. It was signed into law by Governor Pritzker on March 23, 2021, in a historic victory for low-income communities and communities of color in Illinois. With this legislation, Illinois became the second state with an oversight system to ensure that residents are equitably served by all three major segments of the mortgage lending market: state banks, credit unions, and state-licensed mortgage companies.
This broader coverage 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.
The Illinois Department of Financial and Professional Regulation is currently creating rules to implement the IL CRA, and Housing Action Illinois and our allies are working to ensure it becomes an effective, strong tool for equitable access to capital and financial inclusion.
How does it work?
This is being figured out. In 2022, the Illinois Department of Financial and Professional Regulation is creating rules to implement the IL CRA, and Housing Action and our allies are working to ensure it becomes an effective, strong tool for financial inclusion.
Governor Pritzker signining the IL CRA into law
What have we been doing?
As one the co-facilitator of the IL CRA Coalition, Housing Action Illinois aims to leverage both the federal and state CRAs in pursuit of more equitable investment in our communities.
- In December 2021, we submitted a joint letter with 32 signatories to the Illinois Department of Financial and Professional Regulation with recommendations for implementing the IL CRA.
- We testified and submitted a written statement—and assisted other groups to do so as well—during an October 18, 2021, public hearing held by the Illinois Department of Financial and Professional Regulation regarding potential IL CRA rules relating to consumer and public interest issues.
- We submitted—and encouraged members to submit–comments on the Federal Reserve Board’s Advance Notice of Proposed Rulemaking for the federal CRA in February 2021.
- In late 2020 and early 2021, we joined with the Woodstock Institute and other allies to advocate for the IL CRA; we are grateful to State Senator Jacqueline Collins, State Senator Christopher Belt, State Representative Sonya Harper, and other members of the Illinois Legislative Black Caucus for including the creation of the IL CRA in their agenda.
- In 2020, in the wake of George Floyd’s death, we united with 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.
- We staunchly opposed the 2020 OCC rule, mobilizing advocates to speak up against the change.
- We joined allies in calling for the suspension of CRA rulemaking during the beginning of the COVID-19 pandemic.
Federal CRA Regulators
- Federal Reserve Bank
- Office of the Comptroller of the Currency
- Federal Deposit Insurance Corporation
Illinois CRA Rulemaking
Partner Organization Resources