Community Reinvestment Act: Back to the Movement

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Recently on multiple Sunday afternoons, WGBH Channel 2 has been reintroducing the classic Civil Rights series, “Eyes on the Prize”, and one of the last episodes was entitled ” “Back to the Movement”. It focused on the Community Reinvestment Act (CRA) and has particular resonance today.

A few months ago, Dwayne Keys wrote a wonderful editorial piece regarding the new changes to CRA and the ongoing necessity for continued community engagement and action (Also in The PVD Eye as a Letter to the Editor).  My history with CRA began in 1982, just five years after the incredible passage of CRA in 1977 through local community organizing across the country. I was a regional organizer for the New Hampshire People’s Alliance (NHPA). NHPA was part of the National People’s Alliance under the leadership of Gail Cincotta and Shel Trapp who were part of the national movement that led the fight for CRA. The National People’s Alliance was organizing at the local level across the country to see CRA as part of the toolbox of change to empower community change. CRA is a federal law that requires banks to “affirmatively meet the credit needs of low and moderate income communities”.  In recent years, CRA saw significant improvements that are now in effect. To learn more on the new CRA changes, the National Community Reinvestment Coalition (NCRC) has published a guide.

Fast forward to 1985, Fleet Bank was in the news for questionable lending practices in Rhode Island and filed to acquire some banks in Massachusetts and Connecticut. Local groups came together in what would become the first multi-state CRA protest in the Country, with support from the Massachusetts Urban Reinvestment Advisory Group (MURAG). 22 Rhode Island organizations participated in the CRA challenge. The Federal Reserve Bank of Boston called the plaintiffs “the 22 Protestants”. That CRA protest resulted in early 1986 with a signed, $100 million CRA agreement with Fleet Bank. From that initial community organizing, the 22 Protestants became the RI Community Reinvestment Association (RICRA) as part of Project BASIC within the John Hope Settlement House. RICRA continued with years of CRA advocacy.

The new CRA continues the ratings performance which were in existence previously, which are Outstanding, Satisfactory, Need to Improve, and Substantial Noncompliance which are detailed in: Federal Reserve Board – Evaluating a Bank’s CRA Performance.  There are three tests under CRA for large banks, which include the Lending test, Investment test, and the Service test.  Banks are scored on their business products and strategies, ability to lend or invest in the community, and their record of meeting the credit needs of the community.   There is a misconception that banks making charitable donations is a core element of CRA, it is not. CRA is about credit. To find out how banks in Rhode Island are performing, you may search here: CRA Ratings (ffiec.gov).

CRA continues to require vigilance about its significance in our daily lives. One important area is bank branches. We do not have enough full service, financial institutions in all neighborhoods across the State. Check the Bank Locator for details.  But I have to address the lack of community response, including my own failure, to protest the closure of the Santander branch on Elmwood Avenue in the Elmwood neighborhood in Providence. Originally a Bank Boston branch when it opened in the 90’s, it was one of the first new bank branches in a low-and-moderate income neighborhood when it opened in the 90s. It happened from the CRA community struggle work under RICRA.

Santander Bank Elmwood Avenue branch which is now closed

Today, neighborhoods in Providence such as Smith Hill, Upper and Lower South Providence lack full service financial institutions. We have seen banks, and some credit unions, argue that online banking is more commonplace and levels the playing field without needing physical branches. Yet, we know, with few exceptions, that there have been new banks and credit unions constructed in more affluent communities. Barrington saw an explosion of new branches some years ago, while neighborhood efforts to reinvest in other neighborhoods such as Upper or Lower South Providence or Smith Hill were dismissed. However, I will recognize Chase Bank opening new branches in a range of neighborhoods, including the Valley neighborhood.

CRA is more than metrics and data, which has driven much of the public attention around Washington Trust and Bank of America.  CRA is, and must be, about local engagement regarding the way that financial institutions are investing in the range of financial services needed for neighborhoods and residents.

Back to the Movement is more than a slogan or a sign of nostalgia, it is a call to action for all of us to see the new improvements in the Community Reinvestment Act to reignite community advocacy and organizing for greater financial capital to empower our neighborhoods.

Ray Neirinckx has been a Community Economic Development practitioner since 1982. He is currently the coordinator of the State of RI Housing Resources Commission.