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September 18, 2023

The Community Reinvestment Act (CRA) Rule Proposed By the Federal Reserve, FDIC and OCC Is Deeply Flawed and Will Not Work

WASHINGTON, D.C.— Dennis Kelleher, Co-Founder, President, and CEO, issued the following statement in connection with Better Markets release of a Policy Brief to accompany its recently filed supplemental comment letter, which details extensive statistical analysis using Federal Reserve data that proves the proposed Community Reinvestment Act (“CRA”) rule changes will not work, will not stop redlining, and will not increase mortgage lending for low- and moderate-income families:

“Low- and moderate-income families and communities have been illegally denied credit, investment, and banking services for decades, which has contributed to intergenerational wealth gaps and poverty. The CRA was supposed to change that. It was supposed to help revitalize low- and moderate-income communities merely by making sure they got their fair share of credit, but it has failed, as highlighted by one shocking statistic: home ownership rates among the lowest income Americans are no greater today than they were when the CRA was passed into law 45 years ago. Equally shocking, the banking regulators keep showering the banks near-perfect CRA scores year-after-year.

It is supposed to be the Community Reinvestment Act but has been implemented more like a Reward Banks with Phony High CRA Ratings Act. The CRA isn’t charity.  It isn’t a handout.  It isn’t even a grant.  It’s about providing credit in the form of loans to people living communities that were often destroyed because they were illegally denied credit due to discrimination.

“The new CRA Proposal by the Fed, FDIC and OCC was supposed to change that, but it is deeply flawed and will not work.  This is proved by a detailed statistical analysis of Federal Reserve data applied to the Proposal as presented in today’s Policy Brief and supplemental comment letter. Why the banking agencies themselves did not undertake this analysis or include any analysis in their 679-page Proposal is an inexplicable mystery, but it is clear that the Proposal will not even detect classic cases of redlining and will perpetuate and accentuate the significant failings of the current rule.

“There is currently a lot of pressure for the banking agencies to finalize the Proposal, so much so that Better Markets was discouraged from making these data, analysis, and conclusions public. However, while we fully agree that it is important to complete a new CRA rule, it is more important that the banking agencies consider this data-based analysis and conclusions before they finalize a flawed rule that will not achieve the objectives of the law or the rule.  The good news is that the agencies can fix these key flaws with a few, modest, easy-to-make changes to the Retail Lending Test as detailed in the Policy Brief and supplemental comment letter.

“Tens of millions of long-suffering low- and moderate-income Americans deserve a CRA rule that will actually make a meaningful difference in their lives. A few changes to the Proposal can achieve that and stop rewarding banks rather than communities who have been victimized by discriminatory lending for generations.”

You can find the Policy Brief here and supplemental comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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