Banks & Lending

Under the Community Reinvestment Act (CRA), banks are required to meet the credit needs of all members of their community. In response to “redlining” practices where banks refused to issue credit to minority neighborhoods, the CRA seeks to ensure equal credit opportunities for minority borrowers and low and moderate-income borrowers, consistent with safe and sound practices.

Federal regulators periodically conduct CRA examination of a bank’s performance. A bank receives a CRA rating based on tests of their lending, investments, and services. This includes evaluating loan products, borrower characteristics, grants and investments made to communities, and placements of branches and services. For example, banks can be given credit for efforts made to invest in low and moderate-income communities. They also can be downgraded for fair lending complaints.

The law allows community organizations to participate in CRA evaluations by issuing public comment on a bank’s performance, which can influence the rating a bank receives. Similarly, federal regulators must take public input into account when approving applications for bank mergers or acquisitions.

SLEHCRA works as an alliance of community organizations to examine the performance of banks in the greater St. Louis metropolitan area. We compile research on a bank to evaluate their practices in regards to the Community Reinvestment Act. Research includes data from the Home Mortgage Disclosure Act (HMDA), branch locations, past CRA evaluations, and any other information pursuant to a bank’s activities in the community.  HMDA data is publicly available information reported by the bank on residential loans and includes characteristics of loan applicants like race, ethnicity, gender, and income. Compiling this data allows us to examine to whom the bank is providing loans. Branch locations and information on a bank’s assessment area allows us to see the areas a bank is serving.

SLEHCRA, as an organization representing the greater community, becomes concerned when a bank is not adequately serving the entire population and community. Public comment letters highlight those concerns and are filed with federal regulators.  That letter goes into a bank’s CRA file and can influence their CRA rating or approvals for mergers or acquisitions. SLEHCRA also informs the bank of our concerns and seeks to work with them to help meet the needs of their community, especially in low-income and minority areas.

You can view SLEHCRA public comment letters and summary reports here.

For further information, contact SLEHCRA.