Community Reinvestment Act modernization for economically vulnerable populations


Michael Morris

Black women in wheelchair using laptop

More than 40 years ago, Congress enacted the Community Reinvestment Act (CRA) to reverse and repair patterns of discrimination in lending that left behind economic opportunity and advancement for low- and moderate-income (LMI) neighborhoods and LMI populations. In 2021, as federal bank regulators grapple with how best to modernize CRA regulations, there is a new level of awareness to inform such reform. There is a lack of equity for communities of color and vulnerable populations, including people with disabilities, that has been shown through history, culture, and past practices in continuing to produce economic inequality. We now have the opportunity to correct this.

Forty years ago, LMI was a narrow data point representing a homogenized view of economically vulnerable people. In 2021, CRA modernization can no longer overlook the heterogeneity of diverse populations with multiple identities defined by race, ethnicity, disability, gender, age, and sexual orientation.

Individuals with disabilities at the intersection of race or ethnicity, and particularly women, are more likely to be unemployed or underemployed, face poverty, and lack savings for an emergency. Individuals who are Black and disabled, according to 2019 Census Bureau data, have an average net worth of $1,282. Comparatively, working-age (21-62+) white adults without a disability have an average net worth of $132,400. Bank performance evaluations by federal examiners, however, tend to ignore whether investments or lending have reach within the nuanced diversity of LMI populations, and, in particular, its impact on LMI people with disabilities. 

Within the disability community, like among all people, there are some who aspire to be savers, homeowners, small business developers, and asset builders. However, many individuals with disabilities continue to share stories with the National Disability Institute of experiencing discrimination when seeking access to capital. For those with visible disabilities (physical and sensory), they have experienced the difference of in-person meetings, during which expectations of them immediately drop, and conversations shift negatively from the positive attitude exhibited in communication by phone and online. For those at the intersection of race or ethnicity and disability, such challenges multiply. 

Modernizing CRA evaluation of bank performance must intentionally and consistently change this story. Banks need to be proactive in their investment and lending to respond to the diverse needs of LMI populations. Data must be disaggregated and analyzed to document affirmative action that produces equitable economic opportunity. Modernization goals must include providing people with disabilities pathways to strengthen their contribution to the economic vitality of our country.

To modernize is to transform past practices. A modernized CRA can change thinking and behavior with enhanced expectations about bank performance and inclusive community development.

Views expressed are those of the author and do not necessarily reflect the views of the Federal Reserve.

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