By Saeed Shabazz -Staff Writer-

Activists in Chicago are using the power of the 1977 Community Reinvestment Act (CRA) to ensure that U.S. Bank NA, lives up to its commitments to Blacks and Latinos as they aim to acquire Chicago-area branches of RBS Citizens/Charter One Bank.  

In a letter to the federal Office of the Comptroller of the Currency (OCC) which has oversight on such mergers Woodstock Institute asked the OCC to approve the merger “on the condition” that U.S. Bank “commits to increasing mortgage lending to Black and Latino borrowers. Woodstock Institute is a Chicago-based organization that deals with community issues such as the CRA and has been in existence since 1973.

“The CRA is a great tool for holding banks accountable to the communities where they do business,” said Katie Buitrago, senior policy and communications associate with Woodstock Institute. “CRA use it or lose it!” said Ms. Buitrago in an interview with The Final Call.


The CRA was passed by Congress and signed into law by former U.S. President Jimmy Carter as a way to end “redlining”, the practice of marking a red line on a map marking areas where banks would not invest. “In the heyday of redlining, Black inner city neighborhoods were the prominent target of redlining,” according to Bill Dedman in his 1988 book “The Color of Money”.

The CRA simply says banks are obliged to serve the credit needs of all communities. However, since 2010 – 2011, conservative pundits blamed the CRA for the housing market meltdown of 2008.

Some observers charge that contrary to those claims, the economic crisis was not caused by the CRA. The Community Reinvestment Act is strictly a data mechanism used by regulators to examine each bank’s record of doing business with ‘minority’ borrowers and to take into account their record when deciding whether or not to approve applications for new branches or mergers they point out.

“The Community Investment Act was designed to bring equity for communities of color but since has struggled with implementation,” states Dennis Chin, Communications Coordinator at the New York-based Center for Social Inclusion.

Mr. Chin, in an email to The Final Call noted that before 2008, research showed Black and Latino families making more than $200,000 a year were more likely on average to be given a subprime loan than a White family making less than $30,000 a year. He said this research is important because this practice by the banks “contributed to the largest racial wealth gap we’ve seen in decades.”

The former chairman of the Federal Reserve, Ben Bernanke, speaking at a Community Affairs Research Conference during his tenure warned that nothing had changed in the 21st century, and that CRA advocates would need to understand that government and mortgage market failures were being strictly implemented along racial segmentation.

“That is why we are strong advocates of the CRA,” added Juan Calixto, vice president of external relations at the Chicago Community Loan Fund. He told The Final Call that the CRA is needed because of its social impact.

No other organization understands that more than Fair Finance Watch, based in The Bronx, as they challenged the U.S. Bank merger directly at the Federal Reserve Board in Washington, D.C. through a Freedom of Information Act request.  

That group asked U.S. Bank what branches would be closed after the merger. In answer to the FOIA, U.S. Bank said it would close at least 13 branches most in low-income areas.

In spite of closing the branches in Black and Latino neighborhoods, and reports from advocates that U.S. Bank in 2012 gave out 1,083 loans to Whites, 78 to Blacks and 77 to Latinos; while extending Home Purchase Loans to 268 Whites, 68 Blacks and 60 Latinos — the Comptroller’s office has reportedly “rubber-stamped” that proposed merger.

This lack of governmental oversight led to the initial 2008 predatory lending meltdown argued Fair Finance Watch.