Magazine article Black Enterprise

Protecting Community Reinvestment

Magazine article Black Enterprise

Protecting Community Reinvestment

Article excerpt

Earlier this year, in the spirit of the Civil Rights era, African-Americans mobilized and defeated an attempt by a conservative congressman to water down laws requiring the nation's savings and loan and banking industries to serve minority communities and low-income areas.

The object of the attack was the Community Reinvestment Act (CRA), an anti-redlining law. Before the law was passed in 1977, banks and savings and loan officers actually drew red lines on maps of minority and low-income communities to indicate those areas where mortgages would be refused and loans to residents and businesses restricted. The Act requires banks to disclose the number of loans they provide to minority and low- and moderate-income clients. The banks are rated on lending practices within their service areas. If a bank has a poor rating, its application to open new branches or acquire other banks can be denied.

Advocates say the law has established new relationships between many communities and their bankers. Chris Lewis, legislative director of the Association of Community Organizations for Reform Now (ACORN) says bank commitments for investments $7.5 billion to $10 billion have been secured. Maxine Waters (D-Calif.) whose Los Angeles district has benefited from such agreements, fought attempts to alter the law. "CRA is the only vehicle which requires banks to lend to low-income and minority communities," she says.

The Act is also championed by the Rev. Charles R. Stith, who six years ago formed the Boston-based Organization for a New Equality to focus on economic-justice issues. CRA is a critical element for economic growth, he says, because without capital, communities cannot thrive. Stith cites a U.S. Department of Commerce report indicating that the average net worth of a white family is $40,000, while that of a black family is $4,000. …

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