Decades of redlining and disinvestment in our region’s communities of color don’t just disappear overnight. It takes a concerted effort to reinvest and provide access to financial services for families and communities. It requires a change in practices and policies, and accountability to ensure that our financial system operates with values of equity and fairness. The Community Reinvestment Act (CRA), passed in 1977 as a way to combat redlining, is one of those accountability tools.
Under the CRA, banks have an affirmative obligation to meet the credit needs of all communities, especially low- and moderate-income communities. The CRA is one of the biggest tools providing investments and access to mainstream financial services for lower income families and communities. It’s one of the only ways we can ensure that credit flows to communities that were formerly redlined.
The St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) is a coalition of nonprofit and community organizations working to hold banks accountable to the CRA and increase investment in low-income communities and communities of color. With threats of weakening the CRA now, we are calling for a strong CRA and for banks to specify clearly how they are meeting their obligations to serve the whole community.
Recently, Busey Bank announced it was buying The Bank of Edwardsville. Our coalition is calling for Busey to develop a community benefits agreement that details out how it plans to meet the needs of the community after the merger as part of their responsibility to the CRA. Two years ago, our coalition met with Busey Bank when it entered the St. Louis market by buying Pulaski Bank, and its leaders assured us the positive record of Pulaski Bank would continue.
Now, we see in the data and in many of our experiences that Busey’s performance has significantly worsened over the last two years. Its mortgage lending to low- and moderate-income borrowers has fallen well below its regional peers – a significant fall from Pulaski Bank’s position as a market leader. In contrast, the Bank of Edwardsville is an innovative leader in serving the needs of the community, including successes with specific products, loans, investments, and services.
It is because of the concerning track record of Busey Bank and the need to preserve and expand the leadership of the Bank of Edwardsville that we need to see a community benefits agreement (CBA). The bank will also be among the top 10 banks in the St. Louis region after the merger. Busey Bank leaders said they want to maintain Bank of Edwardsville’s positive record in the community and leverage the strengths of both organizations. We agree that this is an opportunity to leverage the strength of a larger bank to expand Bank of Edwardsville’s successes. However, our coalition needs to see clear and specific measurable commitments for exactly how Busey Bank will continue this. We need a community benefits agreement.
This call to Busey Bank is why the CRA is so important and needs to be strengthened. We need tools to hold banks like Busey Bank accountable to their responsibility to serve all parts of the community, especially when they are expanding into a much larger bank. The CRA gives us this accountability tool, but there are threats to weaken the CRA.
The Office of the Comptroller of the Currency, one of the federal banking regulators, is taking comments right now on changing the CRA. We need to let them know that any changes to CRA need to strengthen it and live up to the spirit and intent of it - providing access to credit and capital for low and moderate income communities and communities of color.
Whether it is reinvesting in distressed neighborhoods or encouraging lenders to offer products that meet low and moderate income borrowers’ needs, the CRA plays an important role in increasing homeownership rates, giving small businesses access to needed capital, revitalizing neighborhoods, encouraging lenders to hire staff that reflects the community, supporting financial education and more. Without the CRA, a report by the National Community Reinvestment Coalition (NCRC) estimates that Missouri’s first congressional district could lose up $300 million in mortgage and small business lending.
The city and the region cannot afford to lose any more lending, services, and investments in our communities. We cannot lose one of the strongest tools to ensure that banks are serving our community fairly and equitably. We need a strong CRA and clear commitments to the community from the region’s leading financial institutions.
Visit ncrc.org/TreasureCRA to learn more.
Elisabeth Risch is the co-chair of the SLEHCRA and the assistant director at the Metropolitan St. Louis Equal Housing and Opportunity Council.