The chairwoman of the House Committee on Financial Services introduced legislation aimed at rooting out discrimination in banking and closing the racial wealth and homeownership gap. Rep. Maxine Waters (D-CA) called H.R. 8833 (Making Communities Stronger through the Community Reinvestment Act) a ‘transformative’ piece of legislation.

Waters said the Community Reinvestment Act (CRA), passed in 1977, has not kept pace with changes in the banking system and is in need of reform to ensure banks serve communities historically redlined.

“More than 40 years ago, Congress passed the CRA in response to racist policies in banking and lending that excluded Black homebuyers and renters from affordable housing options and robbed Black families of the opportunity to build wealth through the American dream of homeownership,” Waters said. “Unfortunately, even after so many years, there’s been very little progress.”  

“That’s why I introduced the Making Communities Stronger Through the Community Reinvestment Act,” she said. “This bill will hold banks accountable to the local communities where they have branches or do most of their lending and make crucial updates to ensure they are providing equal access to affordable credit, investing in the communities they serve and doing their part to close the widening racial-wealth gap. We can’t wait any longer.”

The bill would update the CRA by:

• Ensuring bank services, loans and investments are meaningful and responsive to the needs of low- and moderate-income communities and communities of color.
• Providing local communities with more of a say on banks’ CRA exams and activities.
• Requiring CRA examiners to consider all unlawful activity on banks’ CRA exams.
• Requiring CRA exams to evaluate bank lending done in partnership with non-banks and fintechs.
• Encouraging lenders to make more small-dollar mortgages, specifically those under $100,000.
• Building a strong record of data to better identify ongoing discrimination or racial disparities and provide a pathway to consider this information on bank exams in the future.

The legislation is endorsed by the Association for Neighborhood and Housing Development, the California Reinvestment Coalition, the National Alliance of Community and Economic Development Associations, the National Community Reinvestment Coalition, the National Coalition for Asian Pacific American Community Development, ProsperityNow and UnidosUS.