Long-Awaited Updates to CRA Stop Short of Goals to Close Racial Wealth Gap

Long-Awaited Updates to Community Reinvestment Act Stop Short of Goals to Close Racial Wealth Gap

Born of the civil rights movement in 1977, the Community Reinvestment Act (CRA) intended to ensure that banks meet the credit needs of all Americans in all communities.

On October 24 the government agencies responsible for CRA oversight announced long-awaited updates to the act – the first in 28 years.

USBC’s national partner, the National Community Reinvestment Coalition (NCRC), praised new measures to halt practices that for decades allowed “blatantly discriminatory banks to receive ‘Outstanding’ grades for atrocious performance.”

But NCRC called out the agencies’ failure to set explicit goals to close the racial wealth gap that has resulted from those practices.

As noted in our October newsletter, the racial wealth gap still yawns wide open in New Mexico. A 2022 Housing Equity Needs Assessment in Albuquerque, the state’s largest housing market, showed that Black communities are more than twice as likely as White communities to be denied home loans.

As a result, Black communities in Albuquerque own only $1 in home equity for every $35 in home equity owned by Whites.

The housing wealth gap in the Metro dates to the mid-1900s when racially restrictive covenants segregated neighborhoods.

These covenants restricted homeownership for people of color to specific neighborhoods, and up to the present time have continued to direct public investment dollars away from these neighborhoods.

The report concludes that Albuquerque’s regional economy could be nearly $11 billion stronger if the racial wealth gap was closed.