NCRC Senior Advisor Josh Silver gave the following remarks in a keynote address at Building Alabama Reinvestment’s annual conference on May 12, 2022.
First of all, I want to thank Bob Dickerson and Building Alabama Reinvestment for asking me to keynote today. It is a great honor to be here before you and to speak today about this important topic. I have been in the CRA and fair lending field for more than 25 years. After a while, you think you have mastered your field — but then you quickly become humbled when you realize that there are constantly new or overlooked ways of looking at fair lending and civil rights issues. I have been proficient with the legal technicalities of the law and regulation of the Community Reinvestment Act (CRA) for a long time. I am actually one of those strange policy wonks who enjoys working with the CRA data and Excel spreadsheets.
The Contradictions Of Democratic And Racist Thought In American History
What I did not realize until a few years ago was the total devastation of decades of redlining. You could say this type of discrimination had its antecedents in 1619 when the first slave ship appeared on the east coast. You could say that Reconstruction right after the Civil War provided a glimpse of a multi-racial society in which economic and political power was shared or at least more equitability distributed. Then the violent backlash began after the election of 1876 resulting in Black Codes and Jim Crow. Decades later, redlining was invented by, of all institutions, the federal government.
All of these events and dates are pivotal regarding where we are today. They established a system of vicious and systemic discrimination that focused oppression on African Americans but that afflicted all people of color. The result is predictable – little or no wealth, poor health outcomes, less education, lower wage jobs…disadvantages that seem overwhelming were it not for the indomitable will of an oppressed people.
I have always been a student of American history but my interest was increased in recent years as I started reading Richard Rothstein’s The Color of Law, biographies of Abraham Lincoln and Frederick Douglass and works of and by movement heroines such as Barbara Jordan and Fannie Lou Hamer.
One can simultaneously be ashamed of this country but also an adherent to its best ideals. The Founders epitomize these contradictions. An enslaver wrote these words, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” These lofty principles derive from religious prayers and teachings that all humans are sacred in the eyes of the divine and as such should be respected and empowered. However, Thomas Jefferson most likely had White men in mind when he wrote these words. Yet, this limitation did not deter others from applying his objective to all humans of all colors, hues, genders and sexual orientations.
A century later, the country fought a war over one of the most evil forms of racial oppression and subjugation. In the midst of that war, President Lincoln travelled to Gettysburg and in his brilliant succinctness stated:
“We here highly resolve that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.”
Government of the people and by the people shall not perish…these words have recent resonance as we emerge from an election in which some forces pushed for an outcome that was not democratic, and as a brutal autocrat now kills thousands of innocents in his war against Ukraine. And these words propel us towards fulfilling a democratic promise – not only governing democratically but creating a more democratic economy through CRA and the fair lending laws that give everyone a fairer chance in the race of life – something that Lincoln kept going back to in his speeches. It is also my belief that CRA’s goal of a more democratic and equitable economy also produces a more efficient one since more participation from all segments of society in economic decisions brings out increased enthusiasm and better ideas for making an economy work.
Lincoln stated that the “leading object” of government is “to elevate the condition of men – to lift artificial weights from all shoulders – to clear the paths of laudable pursuit for all- to afford all, an unfettered start, and a fair chance, in the race of life.”
Yet, Lincoln was confronted by his own contradictions. He was not an integrationist nor an abolitionist. He knew that slavery was evil but initially was in favor of colonization under which African Americans would be re-settled in Africa. However, his views evolved, likely influenced by great civil rights leaders like Frederick Douglass. We do not know exactly where he would have ended up had he not been assassinated but most likely would have embraced the short lived economic and political democratic programs of the Radical Republicans during Reconstruction.
This is a central tension in American history. There were leaders who had democratic impulses and who wrote those down in visionary documents but were also limited by their racism. Some abolitionists like William Lloyd Garrison reacted to the endorsement of slavery in the Constitution by literally burning the document. Others like Frederick Douglass decided that the Constitution could be employed to hold the country to its ideals and empower all people beyond the White men with whom the Founding Fathers were pre-occupied.
Contradictions Continued – Redlining Invented By The New Deal
As America transitioned from an agrarian society to an industrial one, racism found new forms of expression in creating a segregated and unequal society. In the midst of a Great Depression and in a genuine effort to uplift the dispossessed through the New Deal and a program to rescue families from foreclosure, the Roosevelt administration nevertheless invented redlining and exacerbated segregation. Within the administration, there were civil rights figures including his wife but the overwhelming racism within society guided the Home Owners’ Loan Corporation (HOLC).
HOLC sponsored the creation of maps that classified city neighborhoods by risk they posed to lending institutions. Neighborhoods were color coded – green for the most desirable neighborhoods while red classified the most hazardous ones. The classifications were guided by some objective criteria such as the quality of the housing stock but a heavily weighted factor, if not the predominant factor, was the racial composition of the neighborhoods.
A significant presence of African Americans or an in-migration of African Americans usually resulted in a classification of “hazardous.” A presence of other “undesirables” such as Jews or other recent Eastern or Southern European immigrants often propelled a neighborhood into the red category.
These classifications later influenced the maps created by the Federal Housing Administration (FHA). The maps and their racist assumptions subsequently guided public and private sector lending across neighborhoods. In the post-World War II years, FHA-guaranteed lending dominated and contributed to segregated White suburbs and established a White middle class of homeowners. African Americans were systematically excluded – only 1% of mortgage loans from 1930 to 1960 went to African Americans. The institutionalized racism in the public sector and in the lending industry was aided and abetted by the KKK and White supremacist violence.
Redlining Creates Disadvantage That Spans Decades
NCRC studied the impact of the HOLC maps on the fate of the urban neighborhoods classified into the various risk categories.
- We found that nationally, 91% of the areas classified as “best” are middle and upper income today, while 74% of the areas classified as “hazardous” are low- and moderate-income today.
- By race, 85% of the “best” areas are predominantly White today while 63% of the “hazardous” areas are majority-minority.
- The average poverty rate increased from 14.3% in tracts in the lowest quartile of historic redlining score to 28.1% in tracts in the highest quartile of historic redlining score.
- In 2019, Black homeownership was lower than it was when segregation was legal.
NCRC also found statistically significant associations between greater redlining and pre-existing conditions for heightened risk of serious health conditions like asthma, COPD, diabetes, hypertension, high cholesterol, kidney disease, obesity and stroke. All of these conditions made the “hazardous HOLC communities” more susceptible to COVID during the pandemic.
On average, life expectancy was lower by 3.6 years in redlined communities, when compared to the communities that existed at the same time, but were high-graded by the HOLC.
NCRC partnered with the University of Richmond to create digital and historical maps. One can go to our website and, for hundreds of cities, look at how neighborhoods were classified and what the impact is today. I did this for a Birmingham community that was predominantly African American while the HOLC maps were being created. The community was near Smithfield Court.
Here is what the appraiser said:
- Both sales and rental prices in 1929 were about 20% off from the 1926-28 peak.
- Located in this area is Smithfield Court, a few low-cost slum clearance projects containing 544 units. This area is generally considered real African American property in Birmingham.
- Locations of property within this area justifies policy of selling rather than holding. Vandalism. Difficulty of rental collections.
- City jail in area. Heavy traffic. Pan-American Petroleum Refinery in northwest portion presents fire hazard. Birmingham Gas Co. in area. Obnoxious odors, noises and dirt. Fertilizer plant in area. 3 main line railroads.
Disadvantage continues today. Here are the current socio-economic statistics for the community:
- Percent people of color – 94%
- Life expectancy – 69 years
- Poverty rate – 34%
- Rate of serious health ailments: asthma – 13%, high blood pressure – 56%
Recently, a new study found that public and private sector entities continued to place facilities such as oil rigs that exacerbated the disadvantage of the redlined areas. It seems like once damned, forever damned. Note the refinery and jail recorded by the appraiser in the community above.
The HOLC’s racist maps created and codified disadvantage more than 80 years ago. This disadvantage became institutionalized through lending practices, public sector zoning and planning and White supremacist violence. Your destiny was baked even before your birth by your race and zip code. A scandalously unfair and unequal society emerged contrary to the ideals of the Declaration of Independence, the Constitution and the Gettysburg Address.
This society is strikingly different than the society described by prominent conservative thinkers like Charlies Murray in which opportunity is plentiful and only limited by individual effort. However, these thinkers are incorrect: it is not the stereotype of the lazy welfare queen that consigned people to dismal fates. Rather it is structural and institutional racism. The public and private sector combined to deny African Americans a pathway to the middle class and opportunity for upward mobility by shutting them out of homeownership.
Advocacy Beats Down Redlining
If you think that these daunting obstacles would demoralize a people and keep them down, think again. You do not need me to tell you about the heroic civil rights struggle that spanned decades involving leaders like A. Phillip Randolph in the 1930s and 1940s to Rev. Dr. Martin Luther King to The Rev. Dr. William J. Barber II today. It was not only the leaders; they would not have succeeded if it were not for the “ordinary” men, women and children in the streets risking their life and limbs. Bob Dickerson has told me memories of the church bombing in Birmingham. Bull Connor was defeated because “only love can drive out hate.”
One set of laws that the Civil Rights movement secured was the Community Reinvestment Act, the Home Mortgage Disclosure Act (HMDA), the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA Act). These laws build on the premise of the Declaration of Independence, the Constitution and the Gettysburg address. To create a more equitable society and combat redlining, CRA requires banks to serve all communities in an affirmative manner. ECOA and the FHA Act prohibit discrimination in housing and lending markets. HMDA creates publicly available data showing loans, denials and pricing to various demographic groups including modest income borrowers, people of color and women.
Inspired by community advocates, these laws empower communities to hold lending institutions publicly accountable. Any member of the public can use the HMDA data to assess whether particular lenders are giving people a fair chance in Lincoln’s race of life to acquire wealth via homeownership and small business ownership. CRA requires federal bank agencies to examine and rate banks on the extent of their lending, investment and services to modest-income communities. Any member of the public can comment on CRA exams and merger applications regarding a bank’s fair lending and CRA performance. This codifies the Gettysburg imperative of “government by the people” in that a law mandates the input of people who have deposits in the institutions that are making decisions about which communities will prosper via loans.
Well…how well have CRA and the fair lending laws worked to achieve a more equal and democratic society? Before I offer some thoughts and statistics, it is important to remember that one set of laws addressing one aspect of discrimination cannot be expected to remedy all of the ill effects of widespread discrimination that envelops multiple sectors of society. A quick way of thinking about this is to recall where we are as a country: a land of unfulfilled promise and contradictions that has nevertheless achieved some significant success. Yet, much progress remains to be achieved in tearing down the walls of racism and exclusion.
Success In Birmingham But More Needs To Be Done
From 2009 through 2018, NCRC calculated that CRA-eligible lending in Birmingham has included $6.985 billion in mortgages to low- and moderate-income (LMI) borrowers or tracts. During these years, banks made $3.023 billion in CRA-eligible loans to businesses in LMI tracts.
However, we cannot rest on our laurels. In Birmingham using HMDA data from 2018 through 2020, NCRC finds that:
- LMI census tracts contain 31% of families but received just 12.1% of home purchase loans.
- Communities of color (majority-minority tracts) contain 25% of families but received just 10.2% of all home purchase loans.
- In FHA lending, racial disparities in pricing are present. Independent mortgage companies made just over 7,000 FHA home purchase loans and 76% of these went to African Americans. The median closing costs were $5,201 for African Americans and $3,557 for Whites. This is a difference of $1,644 in closing costs. There was a racial disparity as well in closing costs in the case of banks but it was smaller at $525.
What accounts for these striking contradictions? We observe progress overall but significant disparities by race and income of neighborhood. It is beyond this speech to thoroughly explain this but it is clear we (public, private and non-profit sectors) must work harder to underwrite and market safe and sound loans more aggressively in underserved neighborhoods. We must simultaneously tackle other barriers including lack of access to decent paying jobs, quality schools and health care. In addition, CRA has not been implemented over the years in a consistently rigorous manner; the institutional will has ebbed and flowed.
Yet, I can report on two particular success stories showing that enforcement and advocacy have propelled lenders to make more loans to underserved communities. In one case, a sizable regional lender settled with the Department of Justice and the Consumer Financial Protection Bureau in 2016 over redlining. Since then, this bank has worked harder. NCRC’s fair lending tool revealed that of the top twenty lenders in Birmingham, this bank was among the leaders in making loans to underserved communities. From 2018 through 2020, of the 1,015 home purchase loans made, 47% went LMI borrowers, 42% to people of color and 22% in communities of color.
In another case, NCRC and our member organizations commented on a bank merger application, asserting that another large regional bank was lagging its peers in making loans to people of color. The FDIC agreed; it approved the bank’s merger application but required the bank to submit a plan describing how it would improve its lending to people of color. Since that time, NCRC’s fair lending tool revealed that this bank was also a leader in making loans to people of color, exceeding the percentage of loans to people of color of most of its peers.
These two case studies are victories which I am sure many of you in this room are continuing to work on sustaining and improving. But we want more victories and more discernible progress in combating long-standing disparities caused by institutional and systemic discrimination. Which brings me to CRA reform.
CRA Reform: The Next Stage In Our Effort To Combat Inequality And Racism
Since CRA’s implementation in the late 1970s, the most substantial changes to CRA regulations and exams occurred in 1995. The technological and banking landscape has changed since then. The internet transformed from a novelty to almost a necessity. While new approaches such as online banking expanded, old problems such as racial disparities in lending were also not addressed.
Last Thursday, three federal bank agencies issued proposed changes to the CRA regulations; these could be the most significant changes since 1995. But to make sure that CRA is changed in a positive manner, we must continue the American tradition of advocacy. NCRC has 600 member organizations. We will need every single one, plus allies in this room, to comment on the proposed changes and tell the regulators what they got right and what must be improved. Here are some priority areas:
CRA and race: CRA exams do not explicitly consider race. In 1977, Senator William Proxmire, the main sponsor of CRA, probably concluded that the statute could not specifically mention race so that it could pass. As it was, CRA squeaked through Congress. However, there is room for considering race on CRA exams since the statute requires banks to serve all communities. CRA exams could consider lending in underserved tracts, which are disproportionately communities of color. In addition, CRA exams could consider lending to people of color in geographical areas where lending disparities are particularly stark.
CRA and geography: In 1977, banks made loans through branches. During the 1995 changes, the agencies did not update CRA to consider lending beyond branches since the internet was in its infancy. Now, online banks and other banks using brokers make considerable numbers of loans outside of their branch network. CRA exams still mainly consider lending in geographical areas where banks have branches. In addition, CRA exams must consider lending in geographical areas with substantial volumes of loans but no branches. This occurs in Birmingham. There is one very large lender making high volumes of small business loans in Birmingham but its percentage of loans in LMI tracts is a third to a half less than its peers. It has no branches in the metro area and hence its CRA exam does not cover Birmingham. Its performance likely would be better if its exam covered Birmingham!
CRA and ratings inflation: About 98% of banks pass their exams and 90% receive the rating of Satisfactory, which is like a B. There is no way that 90% of banks perform in the same manner. If the 90% was split up to identify those banks that are barely passing or low satisfactory, this accuracy improvement in the ratings would motivate the laggards to improve. The result would be significantly more loans, investments and services. Either a fifth ratings category could be introduced or a point system could be implemented to meaningfully reveal more distinctions in performance.
Many other aspects of CRA exams need to be reformed including better data collection. During the public comment period on proposed changes to the CRA rule, NCRC will be holding conference calls to go over the major items that need improving. We will help you comment on this critical proposal.
Change is episodic when civil rights and fair lending laws have holes and are implemented in an inconsistent or halfhearted manner. This is an opportunity to close the holes in the CRA regulation whose net has frayed due to regulatory neglect over two decades. Only strong and persistent advocacy can close the gap between the nation’s democratic ideals and our less than democratic practice. It is time to implement those lofty words in the founding documents. It will take all of you…it will take more than a village. Please use your voice and comment during the next few weeks.
Our nation’s soul needs repairing. Grinding inequalities do not make for a harmonious society. Polarization and strife increases. CRA reform is an opportunity for multiple groups in society to be empowered: people of color, poor Whites, women- and minority-owned small businesses, people with disabilities and other underserved communities.
The challenge for us is to give positive proposals for change the backing that it needs. Rise up and move up and onward. Thank you!
 The 1619 Project, created by Nikole Hannah-Jones, https://1619books.com/
 For more on Rothstein’s Color of Law, https://www.epi.org/publication/the-color-of-law-a-forgotten-history-of-how-our-government-segregated-america/; David Blight, Frederick Douglass: Prophet of Freedom, http://www.davidwblight.com/books; Mary Beth Rogers, Barbara Jordan: American Hero; Barbara Jordan and Shelby Hearon, Barbara Jordan: A Self Portrait; Kay Mills, This Little Light of Mine: The Life of Fannie Lou Hamer.
 Text of the Declaration of Independence can be found here: https://www.archives.gov/founding-docs/declaration-transcript
 Text of the address can be found here: https://rmc.library.cornell.edu/gettysburg/good_cause/transcript.htm
 Harold Holzer and Norton Garfinkle, A Just and Generous Nation: Abraham Lincoln and the Fight for American Opportunity, Basic Books, 2015, p. 71.
 For a history of Lincoln’s evolving views on slavery and African Americans, see Eric Foner’s The Fiery Trial
Abraham Lincoln and American Slavery, available via https://wwnorton.com/books/the-fiery-trial/. Included on this website is a NY Times book review by David S. Reynolds from September 2010.
 For accounts of Garrison’s views of the Constitution, see https://www.archives.gov/publications/prologue/2000/winter/garrisons-constitution-1.html and https://www.pbs.org/wgbh/americanexperience/features/the-abolitionists-garrison-burns-constitution/#:~:text=After%20fighting%20for%20the%20abolition,a%20copy%20of%20the%20constitution.
 See David Blight’s biography cited above.
 Bruce Mitchell PhD., Senior Research Analyst and Juan Franco, Senior GIS Specialist, HOLC “Redlining” Maps: The Persistent Structure Of Segregation And Economic Inequality, NCRC, March 2018, https://ncrc.org/holc/
 See slide 39 of Unpacking the Black Wealth Gap, CFPB FinEx Webinar, February 22, 2022, presentation by Dr. Charles Nier, Sr.Counsel, Supervision and Policy, CFPB, https://www.youtube.com/watch?v=l2bmkTQpobE
 NCRC, HOLC “Redlining” Maps, op. cit., p. 9.
 Jason Richardson, Director, Research & Evaluation, NCRC Bruce C. Mitchell PhD., Senior Research Analyst, NCRC, Helen C.S. Meier, PhD, MPH, Assistant Professor of Epidemiology, University of Wisconsin – Milwaukee,
Emily Lynch, MPH, Graduate Student Research Assistant, University of Wisconsin – Milwaukeem Jad Edlebi, GIS Specialist, NCRC, Redlining and Neighborhood Health, https://ncrc.org/holc-health/
 Redlining and Neighborhood Health, https://ncrc.org/holc-health/
 For maps of several cities, see https://ncrc.org/holc-health/ and scroll down towards the bottom. For a map and statistics of this community, see https://dsl.richmond.edu/socialvulnerability/map/#loc=11/33.523/-86.812&city=birmingham-al&tract=01073004200
 Gonzalez, D.J.X., Nardone, A., Nguyen, A.V. et al. Historic redlining and the siting of oil and gas wells in the United States. J Expo Sci Environ Epidemiol (2022). https://doi.org/10.1038/s41370-022-00434-9 or https://www.nature.com/articles/s41370-022-00434-9#citeas
 For more on Charles Murray, see https://en.wikipedia.org/wiki/Charles_Murray_(political_scientist)
 For more on A. Phillip Randolph, see https://en.wikipedia.org/wiki/A._Philip_Randolph
 Calculations done on the NCRC CRA lending tool, see: https://ncrc.org/treasureCRA/
 NCRC Fair Lending Tool available to NCRC members via NCRC’s website, https://www.ncrc.org/2021-fair-lending-report/
 See the settlement here: https://www.justice.gov/opa/pr/justice-department-and-consumer-financial-protection-bureau-reach-settlement-bancorpsouth
 Calculated using NCRC’s fair lending tool.
 The FDIC conditional approval order available from NCRC upon request.
 Bruce Mitchell, PhD. and Josh Silver, Adding Underserved Census Tracts As Criterion On CRA Exams, NCRC, January 2020, https://ncrc.org/adding-underserved-census-tracts-as-criterion-on-cra-exams/
 Brad Blower, General Counsel, NCRC; Josh Silver, Senior Policy Advisory, NCRC; Jason Richardson, Director of Research and Evaluation, NCRC; Glenn Schlactus, Partner, Relman Colfax PLLC; Sacha Markano-Stark, Attorney, Relman Colfax PLLC, Adding Robust Consideration Of Race To Community Reinvestment Act Regulations: An Essential And Constitutional Proposal, NCRC, September 2021, https://ncrc.org/adding-robust-consideration-of-race-to-community-reinvestment-act-regulations-an-essential-and-constitutional-proposal/
 NCRC, Position Paper On CRA Reform, March 2022, https://www.ncrc.org/position-paper-on-cra-reform/