The ABCs of the CRA, in Under 8 Minutes

Not entirely sure what the Community Reinvestment Act (CRA) means in the context of your work? A new short video from the Federal Reserve explains the basics of this important legislation.

The CRA, like its name implies, is a law aimed at reinvesting in communities — specifically, at banks’ reinvesting in the communities they serve. It helps bring billions of dollars in bank capital to low- and moderate-income communities every year.

Understanding how this law works is essential not only for banks looking to make impactful loans and investments, but also for non-profits seeking funding and communities wanting to ensure their financial institutions are operating in fair and responsive ways. Did you know, for instance, that some banks get CRA credit for investments related to healthy communities?

Learn how the CRA works and what it means for communities across the country.

Whether you’re a banker, community leader, nonprofit head, or consumer, take a few minutes to watch this video and get to know the CRA and what it means to you.

Additional Fed resources on the CRA:

About the Community Reinvestment Act

Community Development Data Guidebook

Understanding Community Development Needs through the CRA Performance Context

A Banker’s Quick Reference Guide to CRA

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Ex-President of Trader Joe’s Starts Nonprofit Grocery

I love the idea of making use of perfectly good food that otherwise would be thrown out. Despite initial skepticism from the neighborhood where the Daily Table grocery was to open, customers are really grateful for the access and the low prices.

Taryn Luna the Boston Globe quotes the founder: ” ‘Our job at Daily Table is to provide healthy meals that are no more expensive than what people are already buying,’ said Doug Rauch, the founder of Daily Table and former president of Trader Joe’s. ‘We’re trying to reach a segment of the population that is hard to reach. It’s the working poor who are out buying food, but who can’t afford the food they should be eating.’ …

“Rauch has built relationships with suppliers to divert garbage-bound products to his shelves. He’s careful to point out that it doesn’t mean the food is ‘bad,’ expired, or unsafe to eat.

“A vendor at Haymarket, for example, donated a couple hundred pounds of summer squash he intended to throw away after the food didn’t sell. Daily Table expects to sell it for 59 cents a pound. Rauch said he has also purchased vegetables that grocery stores reject because of blemishes or other cosmetic problems that don’t affect the quality of the product.”

The Globe’s Yvonne Abraham visited after the opening: “They can’t keep the cucumber-pear-mint smoothies and salisbury steak on the shelves at Daily Table.

The food emporium in Dorchester’s Four Corners has been slammed in its first week, with 300 customers a day, and three times more locals than expected signing up for free memberships. Everybody who works at the store — the managers wheeling out food, the white-coated kitchen staff making carrot soup behind the big picture window, the cashiers in bright T-shirts — looks exhausted, and happy.”

From the Daily Table website: “Daily Table is a not-for-profit retail store that offers our community a variety of tasty, convenient and affordable foods that will help you feel and be your best; food that will keep you moving forward, not hold you back.  We provide both ‘grab-n-go’ ready to eat meals, and a selection of produce, bread, dairy and grocery items all at prices that will put a smile on your face, and designed to fit within every budget.  Many of our items are prepared fresh daily in our own kitchen onsite. …

“There are plans to open additional stores in both the greater Boston area and additional cities across the country.

“Working together we can help reduce both the effects of poor eating habits caused by challenging economics, and the impact that wasted food and its precious resources has on our environment.”

More here.

Your faithful blogger is taking vacation August 24-August 28, but never fear! Others from the Boston Fed’s Regional & Community Outreach department have offered to pick up the challenge.


Judge Rules vs Responsible Banking Act in NYC

A well-intended law in New York City to ensure banks invest in poor communities has been found unconstitutional.

Julie Creswell writes at the NY Times, “A law passed by New York City three years ago that required banks to make public their efforts to be socially responsible, particularly in low-income neighborhoods, is unconstitutional, according to a federal court ruling.

“In a decision released on [August 10], Judge Katherine Polk Failla of Federal District Court in Manhattan said the law, called the Responsible Banking Act, conflicted with existing federal and state statutes that regulated banks. …

“The controversial 2012 law created an advisory committee that would assess whether banks that held more than $6 billion in city deposits were providing robust credit to small businesses and modifying mortgages in low and middle-income neighborhoods. After the financial crisis, other large cities passed or weighed similar measures. …

“After Bill de Blasio was elected mayor in late 2013, the city took steps to enforce the law, including making appointments to the oversight committee.

“This spring, the committee sent letters seeking information to the banks. Among the topics it sought information about were the number of foreclosure actions, loan modifications and the number of loans held by the banks that were at least 60 days delinquent. The banks resisted the request, saying that some of the information requested was confidential, involved trade secrets and would be expensive for the banks to produce. At least one bank chose to cease being a deposit bank because of the economic costs needed to gather the required information for the Responsible Banking Act.” Read more at the Times, here.


Tuition Credits for Volunteerism

Here’s an interesting Associated Press story sent along by colleague Sol Carbonell. It’s about older people earning community college tuition credits by doing volunteer work — credits they can use or pass to a young student.

“​Residents in northeastern Ohio at least 60 years old can earn college tuition credits by volunteering at youth-oriented programs.

“GIVE back. GO forward” is a pilot program announced recently at Youngstown State University. It allows seniors who volunteer at least 100 hours at certain organizations to earn three credit hours at Youngstown State University or Eastern Gateway Community College. The program was developed by state officials with support from Gov. John Kasich. The Vindicator newspaper reports that officials hope the pilot can be expanded.

“Volunteers have until May 31, 2016, to earn 100 service hours. They can earn one tuition waiver per year and it must be used within five years. Youngstown and Eastern Gateway will each provide 50 tuition waivers. The volunteers can give their tuition waivers to students.

” ‘I have a dear friend who be an incoming freshman’ at Youngstown State, said, Elsie Dursi, a retired social worker who has signed up to participate. ‘She needs all the financial help she can get. She plans to be a teacher.’ ”

More at the Community College Daily, here.


Racial Wealth Gap, Boston Area

The Boston Fed’s Ana Patricia Muñoz recently published an in-depth study of the racial wealth gap in the Boston area using detailed data about individual ethnic groups from NASCC, the National Assets Scorecard for Communities of Color. (NASCC has new studies for other major cities around the country.)

The Color of Wealth in Boston highlights dramatic differences in what assets different races have and why it is so difficult for some to get ahead. Inherited wealth is a factor as is the value of the same house in different neighborhoods.

The paper’s website says, “The widening wealth gap in the United States is a worrisome sign that millions of families nationwide do not have enough in assets to offer better opportunities for future generations. Wealth allows families to make investments in homes, in education, and in business creation. On the basis of data collected using the National Asset Scorecard for Communities of Color (NASCC) survey, we report that, when analyzed by race, wealth accumulation is vastly unequal. By means of the NASCC survey, researchers have collected, for the first time, detailed data on assets and debts among subpopulations, according to race, ethnicity, and country of origin—granular detail ordinarily unavailable in public datasets. In this analysis we focus on estimates for U.S. born blacks, Caribbean blacks, Cape Verdeans, Puerto Ricans, and Dominicans in the Boston Metropolitan Statistical Area (MSA). Our analysis shows that with respect to types and size of assets and debt held, the data collected on white households and nonwhite households exhibit large differences. The result is that the net worth of whites as compared with nonwhites is staggeringly divergent.”

See the report here. Additional media coverage is described here.

You may also be interested in related St. Louis Fed research, highlighted in today’s Boston Globe and the NY Times.

Homelessness in Boston


Further Adventures of EB-5 Green Card Program

At the Boston Fed, we have spent some time looking into the value of the visa program EB-5, which can give out a green card to an immigrant who invests $1 million in US development — or $500,000 in a low-income, underserved area.

For example, read this article in Communities & Banking by Brookings researcher Audrey Singer, with a sidebar from the Initiative for a Competitive Inner City. And note this blog post about our visit to northern Vermont, where the program was used to develop Jay Peak, a ski resort.

The big questions have included concerns about the gerrymandering of districts to qualify as underserved and the quality and longevity of jobs for lower-income residents.

Now the Government Accounting Office is expressing concerns, prompting Sen. Patrick Leahy (Vermont) to defend the program that he has supported.

The Associated Press writes, “Following a critical audit, Vermont U.S. Sen. Patrick Leahy is defending a federal program that aims to have immigrant investors put money into U.S. development projects that create jobs.

“The federal General Accounting Office issued a report Wednesday saying the EB-5 investor visa program can’t detect fraud effectively and does a poor job measuring the program’s economic benefits.

“The program brings millions of dollars of investments into the U.S. every year, and is being used to fund several economic development projects northern Vermont. Construction of a new hotel and conference center at Burke Mountain Resort is being funded primarily by foreign investors who receive visas in return for a pledge of at least $500,000.

“Leahy says the program, which up for reauthorization at the end of September, needs improvements but is worth continuing.”

Photo: Boston Fed First Vice President Ken Montgomery, right, and the Community Development Advisory Council in Newport, Vermont, September 9, 2013. Senior Vice President Richard Walker is in the front row, middle. Beautiful Lake Memphremagog, which borders Canada, is in the background.