Rules on bank lending in poor neighbourhoods are being rethought

THE document is dry, dusted with references to “benchmarks”, “performance evaluation” and “a metric-based framework”. But the 25 pages published on August 28th by the Office of the Comptroller of the Currency (OCC), one of America’s federal bank regulators, may start a protracted dispute over lenders’ obligations to poor neighbourhoods and hence to racial minorities.

The OCC is inviting responses to 31 questions about putative changes to the rules implementing the Community Reinvestment Act (CRA), which was passed in 1977 with the best of intentions: maintaining lending and bank branches in America’s poorest areas; and combating “redlining”, the denial of loans to people in certain districts as a disguised means of racial discrimination. The CRA obliges regulators to assess not only banks’ financial soundness but also their lending to poor customers and small businesses, and their commitment to “community development” in the areas where they operate. The results can determine whether banks are...

via The Economist: Finance and economics Business Feeds

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