Volume 26

Closing the Disability Gap: Reforming the Community Reinvestment Act Regulatory Framework

by Michael Morris, Nanette Goodman, Angel Baker, Kyle Palmore, and Peter Blanck

Since its inception over forty years ago, the Community Reinvestment Act(CRA) has encouraged banks to serve low- and moderate-income (LMI)neighborhoods and populations. Originally signed into law in 1977 to reduce discriminatory credit practices known as “redlining” in LMI neighborhoods, the law mandates that banks provide support and opportunity for communities that are less economically stable through lending, investment, and service. The CRA is an example of public policy designed to spur private sector action, with particular attention to those at the bottom of the economic ladder.

People with disabilities make up a significant part of the LMI population yet the specific needs of this sizable subpopulation are often overlooked. In 2018, more than one quarter (27%) of working-age people with disabilities were living below the poverty level, over twice the rate of those without disabilities, and people with disabilities often are excluded from the labor market and economic opportunities. In 1990, thirteen years after the enactment of the CRA, Congress passed the American with Disabilities Act (ADA), declaring that the “Nation’s proper goals regarding individuals with disabilities are to assure equality of opportunity, full participation, independent living, and economic self-sufficiency.”

This Article examines approaches in law and policy that the CRA may align its goals with the ADA to require financial institutions to better identify and meet the needs of people with disabilities so that they are not left further behind in their struggle for economic opportunity, stability and mobility. It contends that this alignment is necessary because the CRA was enacted to encourage financial institutions, such as banks of all sizes, to address the credit needs of the communities that they serve, including low- and moderate-income neighborhoods.

Certainly, since enactment of the CRA, the financial services industry has dramatically changed. In April of 2018, an Advanced Notice of Proposed Rulemaking (ANPR) circulated by the Office of the Comptroller of the Currency (OCC) presented an opportunity to advance what had become an outdated framework and sought to modernize the regulations that implement the CRA. This Article additionally examines the ways in which an updated framework may aid regulated banks to more effectively serve the needs of their communities (e.g., at their physical locations and online), particularly LMI populations with disabilities.

In Part II, we provide an overview of the CRA. In Part III, we consider empirical evidence showing that people with disabilities make up a significant share of LMI neighborhoods, and that these individuals tend to be worse off than other LMI populations in their access to and use of financial services and achievement of valued financial outcomes. In Part IV, we propose a multifaceted approach to defining community development activities and evaluation of bank performance in ways to specifically address the needs of people with disabilities. Finally, we conclude in Part V, arguing that unless the financial needs of people with disabilities are addressed intentionally and directly as a focus of a modernized CRA framework, this group will continue to be unfairly excluded from the financial system and overlooked in inclusive community development activities.

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