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AG Nessel Joins Coalition in Support of Federal Effort to Strengthen Access to Banking and Credit Services for Underserved Communities
August 11, 2022
LANSING – Michigan Attorney General Dana Nessel joined a coalition of 19 attorneys general, led by California, in a comment letter in support of a joint effort by the Federal Reserve Board of Governors, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency to revise and strengthen regulations under the Community Reinvestment Act (CRA). The CRA is a critical civil rights law enacted by Congress to prevent racially discriminatory redlining in housing and encourage banks to help meet the credit needs of all segments of their communities, including low- and moderate-income (LMI) neighborhoods and individuals. In the comment letter, the coalition expresses its support for the federal agencies’ proposed rule and urges them to go even further in implementing reforms to help tackle persistent racial and economic disparities exacerbated by COVID-19.
"The pandemic has had a devastating effect on communities across Michigan," Nessel said, "Since its passage, the CRA has helped Michigan residents access capital for investments like mortgages and small business loans that have helped them transform their neighborhoods. However, the CRA can do more. That's why I stand with my colleagues in asking that the rule implementing the legislation be strengthened to respond to the financial crises precipitated by COVID-19, a crisis that affects low-and-middle-income communities disproportionately."
Since the CRA was passed by Congress in 1977, it has helped direct trillions of dollars in investments back to LMI communities, increasing access to financial services and loans that incentivize the availability of affordable housing and support small businesses. In the comment letter, the coalition supports many aspects of the proposed rule and proposes additional measures to help ensure that regulators have the tools they need to carry out the CRA’s imperative — for financial institutions to be required to address the needs of the most vulnerable communities. This imperative has never been more important. In prior comment letters, the states expressed concern that the widening racial wealth gap stemming from historical redlining would be exacerbated by an uneven pandemic recovery. Now, two-and-a-half years into the COVID-19 crisis, the states face an affordable housing crisis, increased homelessness and housing insecurity, and historic levels of inflation that disproportionally threaten low-income communities and communities of color. CRA regulatory reform can play a key role in responding to these challenges.
Accordingly, in the comment letter, the states encourage the agencies to focus on:
- Ensuring that the rulemaking vindicates CRA’s core purpose to address racial inequities;
- Raising the regulatory bar to ensure that banks are taking meaningful action to meet LMI community needs; and
- Leveraging incentives to encourage affordable housing development for LMI communities without displacement.
In filing the comment letter, AG Nessel joins the attorneys general of California, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, and Washington.
A copy of the comment letter is available here.