A Letter on Behalf of the Presidents' Council on Impact Investing, a Group of 19 Leading U.S. Foundations with a Shared Commitment to Impact Investing and More than $80 Billion in Combined Assets
The COVID-19 pandemic and the threat of a prolonged recession or even depression will inflict long-lasting damage on our most vulnerable communities, even in a best-case scenario where we can restrain the virus’ spread. Leaders and institutions are rightfully looking to marshal every available resource to aid our collective response. We must move decisively to keep people in their homes, protect the well-being of those most vulnerable, and prepare businesses to reopen when possible. It is in this context that we are calling for the immediate suspension of efforts that could severely undermine the Community Reinvestment Act (CRA) and rob communities of desperately needed support.
Regulators at the OCC and FDIC had taken steps to reform the CRA before this crisis began. While we agree that some reform is needed, the current proposals were rushed and hold the potential to cause significant harm. Given the current situation, the Treasury Secretary and Comptroller of the Currency must immediately pause this work and extend the comment period beyond the current April 8 deadline until well after this crisis has passed and we can fully grasp the human and economic toll.
It is important to understand the historical context of why the CRA was introduced into law. The CRA was first created in 1977 to counteract the effects of systemic racism. It specifically responded to the legacy of redlining, a deliberate and racist endeavor to restrict investment into communities of color. Decades of explicit, institutional discrimination hollowed out these neighborhoods. Because of this intentional underinvestment, these communities stand to suffer disproportionately from the health and economic consequences of the unfolding crisis.
The CRA was created on a simple premise that banks should invest equitably in every community they serve. And over the last several decades, the CRA has successfully mobilized more than $6 trillion in community development loans, investments and services targeted at revitalizing low-income communities and communities of color. Community health centers, childcare facilities and tens of thousands of affordable homes were built through this reinvestment, and without them, our situation would be immeasurably worse.
As members of the Presidents’ Council on Impact Investing, a philanthropic leadership group facilitated by the U.S. Impact Investing Alliance, we write as philanthropies and impact investors who deploy private capital every single day into these communities, often working alongside CRA-motivated investors. If the current reform process continues without delay, every investment that we make and every community partner we support will be thrown into uncertainty at a time when clear and decisive action is imperative.
We urge regulators to heed the urgency of the COVID-19 pandemic and delay the rulemaking process until we can be confident that the worst of the crisis is firmly behind us.