Prosperity Indiana joined state and national partners in submitting comments in support of the Office of the Comptroller of the Currency (OCC) proposal to rescind its disastrous 2020 rule for the Community Reinvestment Act (CRA).
Prosperity Indiana is a network of nearly 200 organizations and individuals committed to advancing community economic development statewide. The focus of our efforts is to ensure everyone can enjoy equal economic and social opportunities and live in thriving communities. In carrying out this work, we know how critical CRA is to ensuring that areas and/or projects that would not otherwise receive investment can secure critical capital from banks through loans and investments for affordable housing and economic development. These investments and credit services spark neighborhood revitalization and help more Hoosiers achieve and maintain economic success.
When this rule was being considered in April of 2020, our membership was strongly concerned not only with the timing and short period of public commenting, which came during the very beginning of the COVID-19 public health emergency, but with the content of the rule which our members believed would undermine the purpose of CRA. In the eighteen months that have followed, the serious damage from the ongoing pandemic has only strengthened the weight of those comments.
What’s at stake in Indiana?
Every Indiana community has a stake in strengthening the CRA, from our small towns to growing suburban areas to the core urban areas. This is true from Angola, which saw $130.3 million in mortgages or loans to LMI borrowers or neighborhoods from 2009 through 2018, $0 in business loans to LMI neighborhoods, and $97.2 million in loans to small businesses, to Warsaw with $277 million in mortgages to LMI borrowers or neighborhoods, $36.1 million in business loans to LMI neighborhoods, and $271.4 million in loans to small businesses. And in our state’s largest metro area of Indianapolis-Carmel-Anderson, which itself spans a large city, a wealthy suburb, and a former industrial center now facing challenges, mortgages to LMI borrowers or neighborhoods totaled $14.2 billion from 2009 through 2018, with $3.9 billion in business loans to LMI neighborhoods, and nearly $4 billion in loans to small business. Indiana’s communities from smallest to largest can’t risk a weakening of the CRA from the rule OCC is rightfully considering rescinding, that would have allowed an increase in discrimination in lending.
Strengthening CRA is a critical component of a just recovery
Indiana communities who have been hardest-hit and are still battling the public health, economic, and housing impacts of COVID-19 are the same who carry the ongoing scars of redlining. The National Community Reinvestment Coalition (NCRC) recently released a major report finding significant correlations between redlining and susceptibility to COVID, including Evansville, Fort Wayne, Indianapolis, Gary and Lake County, Muncie, South Bend, and Terre Haute. In the 1930s, the Home Owners Loan Corporation (HOLC) commissioned the production of maps that rated neighborhoods based on the risk of lending in them. Working class and minority neighborhoods usually received the riskiest designation of hazardous. The designations subsequently facilitated redlining and discrimination against these neighborhoods, which remain starved of credit and are predominantly lower-income and minority. These neighborhoods also have the highest incidence of health conditions such as asthma, diabetes, kidney disease and stroke, which make residents more susceptible to COVID-19. Life expectancy is almost four years lower in the redlined communities than the neighborhoods not designated as hazardous by HOLC.
In Indiana, the pandemic has disproportionately affected communities of color in additional ways. For example, according to the Federal Reserve Bank of Atlanta’s Unemployment Claims Monitor, through October 23, 2021, Black Hoosiers continue to file 27.9% of unemployment insurance claims during the pandemic, although they make up only 9.4% of the labor force.
While we have not seen state-level data about Indiana’s Black-owned businesses, reports from the experiences of our members throughout the state align with nationwide trends showing a disproportionate impact on these businesses. Since the start of the pandemic, more than 440,000 African American businesses (41%) have been closed nationwide, compared to just 17% of White-owned small businesses. Discrimination in lending contributes significantly to racial disparities in small business survival rates. An NCRC investigation found that African American testers applying for Paycheck Protection Program (PPP) loans for their small businesses during the pandemic were likely to receive less information or encouragement to apply than White testers. We do not need state-level data to confirm the impact, and we cannot afford to see the CRA watered down in the meantime. CRA must be strengthened considerably in order to combat discrimination and help our communities recover from the pandemic.
Read the full comments here.