# What This Bill Does: Strengthening Community Reinvestment Requirements for Banks

This bill updates a decades-old law called the Community Reinvestment Act to make banks more accountable for serving low-income and underserved communities. The original law, passed in 1977, was designed to stop "redlining"—the practice where banks would take deposits from certain neighborhoods (often minority or lower-income areas) but refuse to invest that money back into those same communities. This new bill tightens the rules to make sure banks actually follow through on their commitment to serve everyone fairly.

The bill makes several important changes to how banks are evaluated. First, it requires large banks (those with over $2 billion in assets) to set up community advisory committees in each area where they operate. These committees, made up of local residents, housing advocates, and community leaders, will meet with bank executives four times a year to discuss whether the bank is meeting the credit needs of low- and moderate-income neighborhoods. Before banks can merge, open new branches, or close existing ones, they must consult with these committees. This gives communities a real voice in banking decisions that affect them.

Second, the bill cracks down on illegal and discriminatory practices. If regulators find that a bank has violated lending laws, discriminated against borrowers, or harmed low-income communities through predatory practices, that bank will receive negative marks on its official rating. This could affect whether the bank can expand, merge with other banks, or maintain its operating license. The bill also requires banks to report detailed information about who they're lending to, broken down by race, ethnicity, gender, and income level, so discrimination becomes easier to spot and prove.

Finally, the bill encourages banks to do more lending to small businesses, small farms, and low-income homebuyers, including through partnerships with community lenders. It also requires federal banking agencies to study which areas are experiencing discrimination in lending and report their findings to Congress every two years. For everyday people, this means banks will face real consequences if they ignore low-income neighborhoods, and communities will have a seat at the table when major banking decisions are made.

Making Communities Stronger through the Community Reinvestment Act

Waters, Maxine

Making Communities Stronger through the Community Reinvestment Act This bill revises the Community Reinvestment Act, which addresses the availability of credit in communities. Under the act, financial regulators examine a banking institution's community activities such as lending, investments, and services, particularly for low- and moderate-income populations. Specifically, the bill sets forth examination requirements regarding an institution's <ul> <li>illegal or discriminatory activity, </li> <li>partnerships with non-depository lenders, </li> <li>home mortgage lending targeted to low- and moderate-income borrowers, and</li> <li>community service or charity work.</li> </ul> Each institution must establish Community Advisory Committees in areas served by the institution.