A new approach to bank ratings would generate billions more for neighborhoods reeling from the pandemic
National Community Reinvestment Coalition
First published July 2020
- NCRC developed a new ratings system for quantitative measures on banks’ community development financing under CRA. Our suggested ratings could increase community development lending and investment between $15 billion to $28 billion annually.
- This type of financing is critical to communities as they recover from the COVID-19 pandemic. In response to the pandemic, the federal banking agencies have emphasized community development financing that builds or expands health clinics, increases the food supply, increases internet access as well as financing small businesses and affordable housing.
- NCRC finds a large number of banks that make little or no community development lending, suggesting that a more strenuous ratings system can significantly increase this important resource for communities.
- For each quantitative performance measure, NCRC’s suggested ratings reform would award ratings based on how a bank compares to the aggregate peer (a category of banks with similar asset levels or business models).