Strengthening the Community Reinvestment Act to Advance Financial Inclusion and Equity

JANE DOKKO: Good afternoon. I'm Jane Dokko, vice president for community development and policy studies at the Chicago Fed. I want to welcome and thank you and our expert panel for joining our conversation on strengthening the Community Reinvestment Act to advance financial inclusion and equity.

The CRA has been an important law helping communities overcome systemic inequities and access to credit historically redlining the practice of banks not lending or extending services in communities of color restricted access to credit and to economic opportunities for too many families. For decades, the CRA and other laws, like the Fair Lending Act and the Home Mortgage Disclosure Act, have sought to foster investment opportunity. However, I believe we have more to do to achieve equity and inclusion in our financial system, especially in light of the longstanding challenges and inequities amplified by the pandemic and recession.

For the first time in 25 years, the Federal Reserve and other regulators are considering how to revise and strengthen the CRA. We are seeking to reform the CRA to better meet the law's core purpose of addressing redlining and fostering investment in low-income or minority communities. As part of this effort, the Fed is soliciting comments from a wide range of stakeholders through over 50 outreach sessions and public comment letters.

Today's conversation aims to highlight key aspects of the Fed's CRA proposal and areas. We are seeking feedback. Further strengthening the CRA is not the only way the Fed is working to advance a more equitable and inclusive economy.

Through Project Hometown, the Chicago Fed is engaging with communities across the district as they confront extraordinary challenges. We are bringing together civic leaders, expert researchers, Chicago Fed staff, and concerned residents to examine how our hometowns can recover from the pandemic, overcome longstanding inequities, grow stronger, and provide all people with the opportunity to thrive. We're listening, raising awareness of communities' most-pressing challenges, and helping to catalyze solutions.

To start off our CRA conversation, Jason Keller, community and economic development senior advisor, will highlight some key aspects of the Fed's CRA proposal and areas where we are seeking feedback. Then a panel of community development finance experts will discuss their ideas about how to strengthen the CRA. Again, thank you to our audience and panel for joining today. And I'll now hand off to Jason.

JASON KELLER: Great. Thank you very much, Jane. And, Lauren, if we could move to the next slide, please. So here is the agenda for today's conversation.

We've just heard from Jane. I will be giving some short remarks on the ANPR, the background, the objectives, and whatnot. And then we will move into the panel discussion, which is really the highlight of this event. And we'll walk into why CRA is in the process of being modernized and why we are here today. So let's move to the next slide, please.

So again, my name is Jason Keller. I work in community development and policy studies in the same group as Jane here in Chicago. And I too would like to welcome you to this important session. The information I'm about to go over is script-based. But should I inadvertently deviate, the opinions I give are of my own and not necessarily representative of the Federal Reserve board of governors or the Federal Reserve Bank of Chicago.

The Federal Reserve Board issued an Advance Notice of Proposed Rulemaking, or ANPR, on the Community Reinvestment Act on September 21, 2020. And this slide will show you some links to that information as we send this out. These are hotlinks. But you're able to search these through various channels on the board's website.

And you're going to hear the term ANPR quite a bit here over the next hour and 10 minutes. So know that we are referring to the Advance Notice of Proposed Rulemaking. The comment period is due or the comments are due February 16th. So by no accident, we are holding this event today February 4th, which still gives everyone about 12 calendar days to submit written comments.

And that's really the intent of what we were hoping to do here today, is try to solicit as many written comments as we can, as we are going to look through every single one to try to understand what the needs and trends are in relation to the Community Reinvestment Act in 2021 and beyond. So in the next few slides, I will walk through the key objectives of the ANPR, the overall evaluation framework, as well as opportunities for you to submit comments of how we can improve the CRA. So we've already collected feedback from constituents from varying backgrounds throughout our five state region, which includes all of Iowa and portions of Illinois, Michigan, Wisconsin, and Indiana. But you will see that there are people on this webinar from across the country.

As we get into this detail further, you may also wish to read Federal Reserve Governor Lael Brainard's speeches from both September 21st of 2020 as well as December 17th on modernizing the CRA for additional context. So as we move to the next slide, which we're already there, what are the objectives of CRA? And as we think about where we are in 2021, how we attempt to modernize this is really to try to strengthen regulations to ensure that a wide range of low and moderate-income banking needs are being met.

We're also hoping to promote financial inclusion, including credit for activities in areas with unmet market needs outside of banks' current assessment areas, which includes areas like Indian country, as well as regional components in different parts of the country. We're hoping to incentivize investment in minority depository institutions as well CDFIs. Because, if nothing else, what we've learned here during the pandemic, these entities are crucially important to meeting unmet market needs.

We're hoping to update the standards in light of changes to banking over time and as we really think about mobile banking, internet banking, and other ways that the customers access their banking information. So we're hoping that this proposal addresses some of that. And we're really hoping to continue to promote community engagement in a way that again takes advantage of our digital footprint but also trying to understand financial institutions' efforts both locally, regionally, and nationally. The next slide, please.

So as we provide greater certainty, tailoring, as well as trying to minimize burden, the objectives go on to talk about the need for greater clarity, consistency, and transparency. We know that that, again, CRA being a regulation from 1977 and the effort to modernize in 1995. There is definitely a need to have it be brought into the current century.

But we know there are burdens. We know there are opportunity costs. We know there are reasons to think about how CRA is used all across the country. So we want to be able to use existing data when possible. We want to try to tailor performance evaluations to the size of the bank but also understanding different bank business models.

We're trying to still understand local conditions. The performance context is still so critically important in evaluating how banks do their work. And our efforts to understand modernization will continue to rely on that.

But we still hope to clarify and expand eligible CRA activities focused on LMI communities. We know all communities are not created the same. But clarifying and expanding those definitions is part of modernization. But we want to recognize the special circumstances of small banks, community banks, as well as those institutions operating in rural areas across the country where possible. So let's move to the next slide, please.

So additional objectives, so we're hoping to provide a foundation for the agencies to converge, the FDIC and the OCC getting back together to provide a consistent approach that has broad support among stakeholders. And we'll be doing a lot of information sharing with the other agencies as we get these comments in. And that's why we're really hoping to build on stakeholder feedback from extensive outreach.

There have been over 50 listening sessions, small roundtables held throughout the country. Here in the seventh district, we did six of those. But our idea is still to take that information along with the public comment letters that come in and reconverge on CRA as a working group.

And really, our intent is to work towards a consistent approach by reflecting this feedback, providing a long comment period, obviously, as we're going to be at the 90-day mark and then adding to the process by getting comments and additional proposals and options that come through. I'll just take this second to really encourage you to comment on the 99 questions that are there. But if there's other issues that are omitted, if there's other things that you would like to be part of the record, I encourage you to take the time to put your thoughts in writing to the board of governors.

But we also continue to get views of stakeholders throughout the process. So if you'd like to provide individual feedback, we're happy to listen. If you're willing to have us come and talk to one of your groups in the next week or so, we'll be happy to do that as well. Next slide, please. So what is the overview of the evaluation framework? So the goal is really to tailor the framework to bank size and business model. And you're going to see three bullets on here.

As we think about the importance of large retail banks, we think about the importance of small retail banks or community banks. And then we still have wholesale or limited purpose banks to be evaluated under the community development test. But what you're going to see here is that under the retail test, you'll have a subtest for both lending as well as services. And then you'll also have a community development test.

For smaller retail banks, you're still going to be evaluated under the current framework or the new framework. But if small community banks do elect to be subject to the new framework, they would, again, just be really evaluated under retail lending, the same way that they are now. But the most important bullet on this slide is really the recommendation of changing the asset threshold between large retail banks and small banks. And we're really seeking feedback on whether $750 million or $1 billion is a good option or an option not listed.

So if you feel strongly one way or the other, please let us know that in writing. But also, if there is another valuation that you believe is important, please put that down as well. If we could move to the next slide.

And this is probably where we get the most amount of questions and comments. And this is the evaluation framework for large retail banks. So what this slide is showing you, there's a lot of words here, but what essentially it's saying of how the board's ANPR is looking for feedback.

Large retail banks would still be subject to all four subtests, which is really intended to ensure that they meet a wide range of banking needs for low and moderate-income individuals as well as small businesses and small farms. The retail lending subtest would use metrics, a series of metrics to measure a bank's distribution of retail loans, such as home mortgage and small business loans, as well as those loans to LMI borrowers as well as LMI census tracks. The retail services subtest would assess a bank's distribution of bank branches and LMI census tracts and would assess the responsiveness of a bank's products and services, such as checking accounts, saving accounts, other banking services within LMI community.

So what you're starting to see here is a more transparent breakdown of how large retail banks would be evaluated under a modernized CRA. The CD financing subtest would measure the dollar value of a bank's qualifying CD financing activities, such as loans and investments similar to where they are now, but also with a specific focus on affordable housing as well as those activities that have been well-known to revitalize or stabilize LMI communities but relative to a bank's deposits within that assessment area. So deposit market share becoming a new critical component of modernization is something that we're looking very heavily into. But in addition, the CD financing subtest would also assess the impact and responsiveness of the bank's activities.

And then finally, the CD services subtest would assess a bank's CD services such as volunteer activities as well as other initiatives to strengthen communities, so very similar to what large banks are evaluated under now but with a more transparent look of the type of activities that qualify. But it really, importantly, the large retail banks would be evaluated for each of these subtests in each of their assessment areas. So the goal is still to try to understand where large banks are doing most of their work and being able to provide credit as such. Moving to slide nine.

And again, as I mentioned, there's 99 questions under the Advanced Notice of Proposed Rulemaking. And we had thought about different ways of getting some of those questions out there to this group. But really, what we're encouraging you to do is to, if you haven't read the full document, there are several quality summaries out there. Please go ahead and do that.

But really, we thought we could break the questions down into what we're calling five key topics. And where we're seeking feedback is along the racial equity and financial inclusionary piece. And this is really a result of everything that happened in 2020 as well as earlier.

But we want to consider how the CRA's history and purpose really relates to our nation's current challenges. We're not trying to reduce the effectiveness or impact of CRA. We're trying to really improve it but by doing so in a very targeted and strategic way. But racial equity and financial inclusion remains such a critical component. We are looking for suggestions and comments of how we could do that going forward.

As I mentioned earlier, there is a large data collection piece to this. We're not trying to increase data collection burden. But what information should be collected? What information should be reported? How can the regulators use information that's already being reported a little bit differently? We're interested in your feedback there.

We know that community banks located all across our country remain the bread and butter of what so much happens in small places but even in urban centers as well. So really looking at small banks, should the current evaluation framework for small banks be the default approach? Should small banks have the ability to opt in? What sort of metrics should we evaluate when we look at community banks and how they meet market need?

There's a series of questions on assessment areas. And we probably could have done a whole session on assessment areas. But really, if we could boil it down to one question, should assessment areas be delineated based on lending deposits, loan production offices?

But think about how internet banks operate. We're really looking for feedback on how assessment areas should be calibrated, knowing that there is a technical component to CRA compliance. But there's also a practical way that banks meet the market needs. So we're looking for your feedback there.

And then the last one is on an illustrative list. And as we think about community development activities, the OCC has put out a list thus far. So there's one example. But how would an illustrative, nonexhaustive list of CRA-eligible activities provide greater clarity on activities that count for CRA purposes?

We're also interested in impact scores. We're also interested in suggestions on weighting certain activities versus others. So I really encourage you again to go out and look at those 99 questions and provide as much feedback as you feel comfortable. Moving on to slide 10, please.

So here is the comment period. The goal is really to build a foundation for the banking agencies to converge on a consistent approach that has broad support of stakeholders. You're going to find the link here. We've already talked about February 16th being the deadline.

You can go out into the comment page on the Fed website. You can email directly to regs.comments@federalreserve.gov. You can fax the information in. Or if it's a large packet and you have charts and graphs and colors and things, there's a mailing address here as well.

So at this point, I'm going to stop because I think, again, from an overview perspective, a lot of you were already versed in the ANPR. And I want to turn the podium over to Taz George. Taz is a community economic development associate program lead. And in my opinion as well as others, he's done an exemplary job of working with the board of governors in Washington on various components of the ANPR for the past year plus. So there's really no one better to moderate this panel than Taz.

And as I close out, I want to thank everyone for participating today. And I think we've really collected some quality, well-thought individuals to talk about CRA, the ANPR, and give us their ideas of what a modernized CRA could look like. So with that, I will turn the microphone over to Taz. And thank you again for your participation.

TAZ GEORGE: Jason, thanks so much. Lauren, you can move to the next slide while I introduce our expert panel. Jason, thanks again for covering a lot of ground in a short presentation. And I think you highlighted some of the questions that our panel is really going to dig in deep on in this discussion.

Good afternoon everyone tuning in today. As Jason said, I'm Taz George, associate program lead in community and economic development at the Chicago Fed and very excited to introduce our expert panelists and facilitate this discussion. There's three topics in particular that I'm going to ask our panel to address.

Up first is that big racial equity question that Jason raised. Which is, how can the CRA help to address systemic racial inequities and credit access? Second, we'll talk about how CRA can emphasize the important roles of CDFIs, minority depository institutions, and other mission-oriented financial institutions. And third, I'm interested in hearing what this panel recommends in terms of data collection and metrics to inform CRA evaluations.

So there's a lot for us to cover. And I think we'll probably go beyond that as well. And so I'll just quickly introduce our expert panelists. And we'll dive right into the discussion.

You can read their full bios on the web page for our event. And today, we're very fortunate to have Oscar Perry Abello, senior economics correspondent at Next City, Erica King, president of the Chicago Neighborhoods Initiative microfinance group, Fred Mendez, president and CEO of the Woodstock Institute, Ellen Seidman, nonresident fellow with the Urban Institute, and Bob Tucker, COO and executive vice president of programs at the Chicago Community Loan Fund. And I'd like to start out.

Oh, I want to note also for our audience, if you have a question for the panel, you should be able to see that in the bottom right or the right-hand side of your Webex screen note that there is a Q&A box. And if you enter in questions there, I will, with about 15, 20 minutes left, start turning to those questions and raising those to the panel. So please enter your questions throughout the discussion in that Q&A.

And, Ellen, I'd like to start off the conversation with you and welcome others to chime in as well. When you think about previous CRA reform efforts and conversations you've been a part of over the year, I'm curious how the place we're in today compares in terms of the policy issues being discussed. And what stands out the most to you as the biggest change or new development in the conversation today? Ellen, make sure you're off mute, so we can hear you.

ELLEN SEIDMAN: OK. So thank you. Thanks for having me here. Let me just say that the single biggest, most meaningful difference is the focus on racial equity. This is something that was the cause of the CRA to start with, the bases of the CRA to start with. And yet, for all the intervening years, regulators-- and I was one of them-- have been reluctant to explicitly call out racial equity. And I really do think that that is a major change, and it's really important to call it out.

I think there are some other things that are worth talking about, both in terms of what's the same and what's different. And so I will say that this push to have clear metrics, to make everything a number has been part of CRA reforms since 1993. And there are some benefits to it. But it doesn't answer all the questions. And I think my fellow panelists will be pretty clear about that. And that means that examiner judgment, examiner training, consistency among the regulators, consistency between safety and soundness and CRA examiners is just absolutely essential because you can't get it all down into numbers, including impact scores.

I think something else that's consistent is that I think the Fed is right not to try to monetize services. But by not monetizing services, you are again putting the onus on quality exams. And then I think that the agency continues to be conflicted about data. And we will talk a lot more about that later.

On the other things that are different, first of all, the two obvious ones. We've gotten this far. That hasn't happened since 1995. And the agencies aren't together. That also hasn't happened since 1995. But it was a brief flurry in the early aughts. But basically, that's different. So hopefully we can fix that problem.

The other differences are moving away from the tripartite lending investment services to the retail and community development structure, as you discussed. The focus on preapproval, that used to happen. The agencies used to provide essentially no-action letters. That ended somewhere around 1995. So this is an interesting attempt to move back to that. I think there's been much more explicit about dealing with CRA deserts within country, with rural, that whole set of issues. Getting rid of limited scope exams is part of all of that. And finally, the focus on MDIs and CDFIs and credit unions, I think is a difference. It's always been there, but there's much more focus now.

TAZ GEORGE: Thanks, Ellen. I think others on our panel may want to weigh in too on sort of what are the big things that jump out to you in this conversation. Fred, maybe starting with you.

HORATIO "FRED" MENDEZ: Sure. Thanks. And first, I want to thank the Chicago Fed not just for this event but for being a trusted partner for most of my career as I've traveled the financial industry version of the Holy Trinity from regulator to banker to advocate. So thanks.

When I first showed up at the Fed in 1993, we had the 12 assessment factors that were used to evaluate banks' performance. And at best, it was a regulatory version of the wall of Gaylord from the Meet the Fockers with ribbons for ninth place and trophies for efforts versus actual accomplishment. And as you all know, the efforts that we made in the mid 1990s to reform the CRA, the idea was to focus on what banks were supposed to do, which was lend.

So based on some metric that's probably lining a drawer in a desk in the basement of the Fed's New York Avenue building, that would either be the end of the story or investment. And service activity would be evaluated to see what the bank was doing to increase its lending activity to LMI. Now, that required a little bit too much subjectivity from examiners.

So in comes a formula to the rescue, which is where that 50% in lending, 25% in investment, and 25% for service was created. So targets were created. And the exam became a process from which to meet those targets.

Now, being an economist and involved in that, I probably should have known better. There's an old economic axiom that when the measure becomes a target, it ceases to be a good measure. So we're now living with the consequences of that axiom, where 96% of banks are acing the exam, while low and moderate income communities are suffering just as much now than they were when the act was passed. So that's lesson one learned.

Lesson two learned was the fact that we weren't particularly focused on what the banking industry was going to look like in the future. And that's very different in this reform proposal, much more thoughtful. Back in the mid '90s, none of us could have imagined fintech or even could have imagined that the share of lending activity by banks would drop so dramatically in such a short amount of time. The reality of today is that we're obsessing over an antidiscrimination law that pertains to less than 1/3 of lending activity. So that's a big change in the environment as well.

TAZ GEORGE: Thanks, Fred. Oscar, I want to turn to you because I know that you've covered not only CRA reform, but you've covered from a really local community perspective so many different community development initiatives and stories around the country. And I'm curious, from that lens, what do you see as some of the big issues in this conversation, things that Ellen or Fred mentioned or other things that haven't come up yet?

OSCAR PERRY ABELLO: Thanks, Taz. And great to be with you all today. And thank you to you and to the Chicago Fed who are bringing us all together.

Yeah. So I have been reporting on this broad area of community economic development for about five years now. I've written more than 400 stories. I've interviewed and quoted more than 1,000 people and also spoken with at least that many on background off the record over the years through and for my reporting. And so my comments are based on those conversations over time with everyone from grassroots organizers and advocates and bank watchdog groups to CDFIs to bank CEOs and loan officers to local and state and federal officials who are working on all these issues and researchers and academics and others who are studying these things. I've interviewed and talked with all these folks.

And so and I'm really encouraged, as Ellen mentioned, that there's a focus now on racial equity as an explicit part of this conversation that's been left out from since basically the law was passed. Before, it was all about racial equity. And then it was gone for 40 years. And now it's back. So that's great.

Because now it allows me to bring up the point that if the Community Reinvestment Act is going to help drive racial equity, it's going to have to embrace ambiguity. I understand banks want more clarity and consistency. And there's a reason and thinking behind that.

But this conversation isn't supposed to be centered around what banks need. Banks already have a lot from the public. They have deposits. They had federal deposit insurance. They have a license from the public to create money. Banks have a lot from the public.

This CRA, the first word is Community. This is supposed to center on, what do communities need? And that changes over time. You know? And so based on my reporting over these past five years, what Black communities, business communities, and other communities of color want, it includes more loans. But it's not just about more loans.

I want to back up and talk about the history of not just the CRA but the whole conversation of where it came from, that these neighborhoods we're talking about, the communities that were redlines, that were part of why we have the CRA today, these neighborhoods where Black folks live today. We know these neighborhoods. They've been disinvested. They're of deep historical cultural significance.

And as a reporter, when I try to ground my stories in the lived experience of the people in these neighborhoods, the relevant starting point for me has always been the great migration and thinking about how, before the great migration, 90% of Black folks lived in the South. And by the end of it, nearly 1/2 of Black folks lived outside the South. This whole movement of 6 million people, Black folks out of the South to the North and to the West, that shaped the cities we still see today.

In The Warmth of Other Suns, Isabel Wilkerson called this the first big step the nation's working class ever took without asking, right? They exercised their power and their agency. And they made hard decisions to leave the places they had known. And they went to the North and West.

And of course, we know, when they got there, they were told where to live. Racial zoning, private realtors and brokers shepherded them into specific areas. And we know these areas, right? South side and west side of Chicago, north side of St. Louis, the near northwest side of Indianapolis, the Black Butterfly in Baltimore, west Oakland, we know these areas.

And then those areas were redlined. So they were denied the capital to own and invest in the neighborhoods where they ended up. They started their own banks. But those banks couldn't access the same federal mortgage insurance for those neighborhoods that made it affordable the way it did for millions of white families, right?

OK, so despite all that, they made thriving communities out of those places. And the response from white folks was what? It was violence. Black Wall Street burned down in Tulsa 100 years ago. Later on, it became a more polite version of violence in the form of Title 1 slum clearance of the National Highways Act. Vast swaths of successful, thriving communities, thriving in every way except for the built environment bulldozed to make clear the path for highways, right?

Black folks fled one part of the country. They went to another part of the country where they were told where to live. And then many of them were told, you can't have your business here. You can't have your home here. We're going to build a highway. We're going to build a hospital. We're going to build the Gateway Arch. These were neighborhoods that were cleared out, right?

Black folks, Latino communities, immigrant communities have constantly found themselves at the mercy of both the public and private sector that constantly devalued and discounted them and their needs. And you may recall when President Lyndon Johnson convened the Kramer Commission, right, in response to the racial riots in the '60s, the Kramer Commission's findings stated clearly that white people weren't just complicit. They benefited financially from the devaluation and discounting of Black people in that community.

And CRA, that's the conversation, at the time, right, that CRA came out of. It was the last piece of civil rights era legislation passed. It's an expression of those communities standing up to reclaim power over banking. It was supposed to flip the script and provide a platform to put banks at the mercy of people.

And so what these communities want isn't just more loans. What they want is to no longer be at the mercy of a financial system that constantly devalues them. And CRA can't alone solve for that. But if the conversation around CRA regulations doesn't start there, if this conversation starts with, how do we make this easier for banks, then this conversation has failed those communities from the beginning.

This is supposed to be a law to hold banks accountable for meeting community needs. And I'm sorry to say that does not mean greater clarity or consistency. That means an evolving, ongoing conversation about what those needs are, that takes work from banks and from regulators to establish and constantly nourish the relationships and conversations with these communities to, in an ongoing way, establish what those evolving needs are, so that banks are no longer feel or seem like foreign entities to the south side of Chicago or the west side of Chicago. Those are the questions and concerns that they come up when I talk with folks about banking in these neighborhoods across the country.

TAZ GEORGE: Oscar, thank you. That history is so important for us to hear as a backdrop for this conversation. And as it relates to the broader policy objectives that Jason raised, I think it's so important to be cognizant of that. And I want to turn to some of the more specific ways that the ANPR, the board's proposal lays out in terms of ways of potentially addressing some of the inequities in credit access that remain so persistent today.

I think you can see this objective cut across different parts of the board's approach. And so I want to highlight a few of those areas and hear the panel's thoughts on them starting with minority entrepreneurship and access to credit for small businesses. Erica, this is really an area of expertise for you. And I'd be really interested in hearing your thoughts on how CRA can support minority small businesses and micro enterprises and the importance of these entities for communities and building wealth.

ERICA KING: All right, thanks, Taz. And, Oscar, thank you so much for giving us that background, so important to hear. That's a great question. But let me first just start off saying that I've spent my entire career working to support Black and other minority businesses.

I've worked in various commercial lending and business banking roles from number crunching as a credit analyst. I won't tell you the year. But to manage your loan portfolios and loan departments as a senior loan officer. And so my experience in lending and banking runs a little deep. Again, I won't tell you the year. Because, in public, I'm 26.

But this experience combined with the fact that I'm a Black woman that lives in a LMI community, that has helped me to gain a passion for ensuring that Black and other minority entrepreneurs are supported. So the work, historically, that I've done has brought me to where I am today and where I have been for the last seven years as president of Chicago Neighborhood Initiative's microfinance group.

Since 2013, our CDFI has worked to provide microloans and small business loans and education to the very same population of businesses that this Community Reinvestment Act seeks to right. 82% of our services are to African-American entrepreneurs. 71% are to LMI businesses based on their income, which is also consistent with the LMI communities in which we serve.

With all that, though, we still know that there is more work to be done. Let me also say that our organization has benefited greatly from charitable donations over the years and other investments from banks that are seeking CRA credit. Those investments have allowed us to continue to do what we do and distribute grants and loans to LMI borrowers and Black entrepreneurs in LMI communities across the metropolitan area. But as I stated before, more work still needs to be done.

So your question, Taz, about CRA can support minority entrepreneurs more effectively, I want to first make sure to highlight this fact that it is important to make sure-- and Oscar touched on this-- make sure that we make that correlation between minority entrepreneurs and low, moderate-income individuals, right? It's no surprise that in Chicago and greater cook, that the demographics of LMI communities are predominantly made up of Black Americans.

These are the effects of what Oscar already told us about, the Black Belt here in Chicago and then subsequent redlining practices and other practices that caused Black folks the inability to access conventional capital. So when this Act speaks to lending and investment to LMI communities, I want to be very clear that because of the correlation that we just heard, I'm mainly speaking about Black people and Black communities. So I think one of the things we first need to do is redefine the definition of what constitutes a small business loan.

So currently, CRA defines a small business loan as a loan that's less than $1 million. But do we look more into detail and provide different weights and credits based on, of those loans that are $1 million, how many of those are going to small businesses with revenue less than $1 million? Under the CRA Act, a small business loan must be $1 million and within a bank's assessment area but not necessarily required to be made in a Black community, I mean, LMI community. If one of the reasons why the act was created in the first place was to address systemic credit inequities, how is it possible that the same act doesn't work to address this definition?

So another thing, we really need to challenge banks to look at reasons why credit facilities to Black-owned businesses are being denied and find ways to incentivize banks to maybe modify certain lending policies that will reverse these denials for minority entrepreneurs without, of course, jeopardizing the safety and soundness of that bank. I get it. I've worked with regulators in my banking days.

But we ought to look at things like are our banks' LTV, loan to ratio policies too restrictive to adequately meet the needs of Black and LMI communities whose property values never increased at the same rate as other areas here in our area? We need to look at whether or not loan to cost ratios that requires 20% in equity to put down on commercial real estate acquisitions if those are too restrictive and if they don't provide concessions to Black folks who may not have that equity, who may not have had historical wealth. And if wealth did occur, it's been extracted from those same communities. So we ought to encourage banks to look at some of those policies to see why Black folks aren't getting credit as their counterparts.

And the act also should talk about or to address, just to that point, the extraction of wealth in minority communities. And so I know the final rules that have been discussed will create more transparency in the reporting or the goal is to create more transparency in the reporting on the types of CRA products. But I think there's a lot to be said about small business loans and what actually makes that small business loan.

Credit cards, from my understanding, are also considered a small business loan under the CRA Act. So if you look at the credit cards, small business credit cards qualify for CRA. We push credit cards a lot to Black, I mean, LMI communities in order to meet CRA obligations.

I'm not saying that credit cards are bad if they're used correctly because they're meant to be a tool to float funds when receivables are forthcoming. But it's meant to revolve. Without viable lending options, most Black LMI borrowers fund their business strictly on high interest rate credit cards. And that plays its role in extracting capital from Black communities.

I can't tell you how many applications I've seen, I've underwritten from folks that have had to finance their businesses using small credit card debt. If we're looking at banks and their role and their obligation, we ought to look at the amount of the small business loans that they've recording on CRA call reports. How much of that is made up of credit card debt?

Those may not be the right types of tools for Black communities necessarily. It has to be combined with other tools. So increased credit card balances relative to the commitment, that aids in driving credit scores down.

So if you're looking at a population that only has credit cards as an option to fund their business, what will that do to the credit scores? So when they do come to a CDFI like myself or even try to go to a bank at first initially to access credit, it makes it even more difficult for them to tap into some of those noncredit card small business CRA-eligible loans. So do you see how this cycle kind of repeats itself? It's something that needs to be addressed.

We also look at CRA activities. It's important to fund CDFIs that are on the ground providing services, as well as to offer CRA incentives to making sure that small business referrals are going to those CDFIs. We aught to look at ways where banks can be incentivized. Or maybe there's some data collected on, if a bank isn't able to make those loans to folks that are coming to them, have they referred those to CDFIs in their area and looking at more streamlined approaches to doing so. Here in our area, there are platforms that has attempted to make that transition happen. But there needs to be more.

So in addition to that, we want to make sure that CDFIs and folks that are on the ground are still getting the support that they need from bank investments and donations. That capital, the debt, it can't be too rigid. It can't be unaffordable. Because it restricts CDFI's ability to be innovative with the offerings that we have, such as 100% financing, no minimum credit score, no collateral, our ability to make concessions or defer payments during a pandemic that we're still in, our ability to fund the acquisition of mixed-use commercial properties.

I know during my days in banking, it was very hard for a Black entrepreneur to be able to access the right type of debt to acquire properties. And as such, they go to hard money lenders or other predatory lenders that extract funds out of communities because of the high rates of interest that are being charged. So investments to CDFIs need to be affordable. They need to be intentional, flexible. And they must be patient.

It took a lot of time for the country to put these systems in place to restrict and extract credit from Black communities. It's going to take some time for CDFIs to help repair that damage. And the capital that banks get as part of CRA obligations need to also be patient and allow time for those corrections.

And my final point, I'll stop talking. I understand PPP loans are going to be CRA eligible. Correct me if that's not true. But there should be a way to delineate these PPP loans on call reports.

They're likely not going to recur after the pandemic ends. Hopefully that ends soon. That capital offered by banks under PPP is being replenished to banks. And they also come with generous origination fees.

Many banks are participating in PPP because it's the right thing to do. But I also want to make sure that these banks don't get a pass necessarily for just meeting their CRA obligations by offering PPP while still ignoring other types of small business credit products that our Black communities need.

TAZ GEORGE: Thank you, Erica. A lot of really valuable comments in there for us to consider. I want to turn to Bob. Following on Erica's comments about CDFIs, what do you think about how CRA can strengthen the CDFI sector and, as Erica was saying, in the right way to promote the most impactful types of activities for LMI communities, for minority communities? What are your thoughts on that?

BOB TUCKER: No. And, Taz, thank you. And thank you to the Chicago Fed for making me break out a shirt with a collar. I think it's important to understand and acknowledge that we're here at the Chicago Fed, right?

I know we're all virtual. But this is the birthplace of CRA. We all tip our caps to the extraordinary work that people like Gail Cincotta did back in the day decades ago.

But I think sitting on a panel like this and when we pause and look back at that time, I think it's legitimate to ask, how much has really changed though? So I really appreciate Oscar and Jane's comments that CRA isn't a cure all to unraveling systematic racism. But, my gosh, it's a good place to start. And it's a good place for us, as professionals, to look at it.

I love following Erica because she is a trusted and solid partner of my organization CCLF, where I'm the COO. It's even more extraordinary now to realize, if my math is correct then, Erica, that you were named president at the age of 19. So that's very impressive.

But CCLF is also a very unique CDFI much like CNI microfinance group is. We are also led by an African-American. And I have an eight-person management team. And I'm the only white guy. You're looking at the only white guy in my management team. So that's unique in the CDFI realm.

Having said that, when you ask then about what it is that-- and the reason I mention all this is that we look like the communities we serve. We're connected. We are boots on the ground in those communities.

So yes, I'm certainly in favor of CRA giving special credit to CDFI investments. I think it's important. But there's so many other things that CDFIs do that should be reflected in that kind of same work that the banks are doing. For instance, I mean explicitly calling out race on CRA exams and enhancing performance measures and assessing lending and investing and branch services to people in communities of color, that that's hugely important.

Consideration for lending and investing in majority, minority census tracts outside of assessment areas, that's being considered for Native American reservations. Processes like that, I think really need to be taking place now. Because if not now, when are we really ever going to tackle this? And while financial education is crucial, low income and communities of color are the ones truly in need of that financial assistance. And that's where the CRA's emphasis really needs to be placed.

Now, specifically with CDFIs, I think and I know some of my colleagues on the panel today would love to chime in on this as well, I think we serve a huge function. And to the extent that we remain connected and accountable to our communities, that's hugely important. But I see sometimes the CDFI industry these days getting to be a little more bank like.

And it's important that CDFIs play the role not played by banks, that we take risks, and that our board of directors allow us to take risks. My organization, CCLF, we're rated. We're rated by Aeris. And we're rated very well. But we're not rated right at the top.

And on any number of occasions, my board of directors have emphasized to me, you don't want to be rated right at the top. You need to be taking a little more risk. So maybe I set the table with that, Taz, because I know others probably want to weigh in on this as well.

HORATIO "FRED" MENDEZ: Yeah. I'd love to echo much of Bob's sentiments there. I have some similar concerns. My history with CDFIs is a long one. I helped create a bunch of multibank lending consortia throughout the country, both pre and post-CDFI fund, and ranging from housing, small business, community facility, and environmental, and worked with the transition team as a CDFI fund was being created.

And we were all really excited at the time about this new agency because we thought it would be the socioeconomic version of the National Research Institute, where the government would support the banking industry with the aim of taking success to market. Essentially, we saw the CDFI sector as serving as the research and development arm of the conventional banking industry. Now, we've seen some amazing successes. And the industry has more than earned the respect of all of us for the work that they do.

But I've seen somewhat of a moral hazard issue develop, where many banks are outsourcing the provision of financial services to Community Development Financial Institutions, or CDFIs. In most cases, CDFIs are able to provide better service to low and moderate income and minority markets and financial institutions. But is that a feature or is that a bug of the industry? I think that's one question we need to answer. If banks choose to prioritize their efficiency ratio over their customers and they have out in pushing high-touch, low-wealth clients to community development financial institutions, then they'll do it. But this works counter to our goal of mainstreaming low and moderate income and minority customers and reinforces the segregation that we see in the financial industry.

Secondly, not all CDFIs are created equal. The vast majority of them are truly doing God's work. But there are some that are doing some harm. In the consumer lending space, for example, we've got two extremes.

On one, we've got Capital Good Fund, which is offering affordable and responsible small dollar, short-term loans. On the other is Opportune who was forced by bad publicity to cap their interest rates at 36% and are the most litigious lender in the country usually taking a lot of their borrowers to small claims court, which doesn't allow you to have a lawyer. And given Opportune's target market of low-wealth Latinos, they also don't provide interpreters.

So with all that said, is it the right thing for the Fed to do to give banks incentives to support CDFIs? Under certain conditions, the answer is clearly yes, but not under all conditions. I think examiners should ask a couple of simple questions of banks who partner with CDFIs. The first being, why have you chosen not to provide these products yourselves? And secondly, can you show me how these CDFIs are moving the needle on economic security for LMI?

ERICA KING: Yeah, Horatio, I think--

ELLEN SEIDMAN: Go ahead, Erica.

ERICA KING: Sorry. I was just going to say quickly, I think your points are great and well-taken. There's so much work to be done. There's so much demand in the space of small business lending for Black communities and other LMI communities.

Encouraging or incentivizing banks to take a look at some of their credit policies to fill that gap, there's a lot more that needs to be done, I guess, for lack of better words. So we can't do it with banks alone. We can't do it with CDFIs alone. There needs to be that partnership and that balance.

So we'll play in our space and make sure that we're providing the entry-level capital, the "riskier." And I use air quotes to say that because folks, oftentimes, think that it's riskier to provide a loan to a Black business or small business when it isn't necessarily the case. Our charge off rates for less than 3% or less-- I'm sorry-- less than 4% historically. So it isn't riskier.

But what helps us to be able to be innovative and do a lot of things that we do in terms of lending 100% financing, lending without minimum credit scores, giving startup businesses an opportunity to get capital is because of the investments that banks are making into CDFIs that are on the ground doing the work. To your point, you really need to look at the CDFIs and their activities and how are they helping to move the needle. And is there an impact in those areas that we're designing them to be?

Are you funding Black businesses? Are you providing meaningful capital to those businesses sufficient for them to move the needle in their business to either get started or to move that business from point A to point B? Or are you just providing loans for the sake of a loan and it does nothing to really help progress that business forward? Or do your credit policies mirror that of a bank? So there's a lot I could say about that. But I know Ellen want to chime in and say a few things too.

ELLEN SEIDMAN: So first of all, I do think that the points that both Erica and Fred have made that it's really important that the banks do this work. But it's also important that they support the folks who can do it tighter on the ground, at earlier stages of business development, with more handholding, and with more perceived risk. So I think it's a both and.

I want to talk about a specific sector of the CDFI world that I know the ANPR is focused on, namely, the minority deposit institutions. So the minority deposit institutions may or may not be CDFIs. And I actually think just as we've said not all CDFIs are created equal, not all MDIs are created equal either.

But in particular, the minority deposit institutions that do serve lower-income communities and including the ones who serve lower-income communities to build wealth in those communities, which may mean that they're lending to higher income folks who are the entrepreneurs and the developers in those communities, they are in a special place and, frequently, between a rock and a hard place, frankly. Because they are fully regulated banks or, in the case of the low-income credit unions, fully regulated credit unions. And they're subject to the kind of capital regulation that, for example, the CDFI loan funds are not subject to.

And I think they have a special place. But I think it's important to understand that place and to understand what they need and what they don't need. So why do we want them? We want them because they are in those communities, and they are of those communities. And they are going to be there through thick and through thin as long as they're alive. They're not going to come and go with the economic sectors.

They also know those community well. And I think the PPP experience has really emphasized the importance of all of these kinds of nontraditional institutions that we're talking about in actually reaching the kinds of entrepreneurs who have been badly damaged in the pandemic. And then some of the larger ones are in a somewhat different position, but they can frequently be the quarterback to bring together a lot of parts of the community, including the community but also including the government and including the businesses and including the banks to pull together bigger and bigger projects and bigger opportunities.

The critical issue there is making sure that the people in those communities are involved, are involved from the start, and are getting what they need, and not what somebody is putting on them. But because they are between a rock and a hard place, I do want to emphasize what these institutions-- and this is true of the loan fund CDFIs also need. What they need is long-term, inexpensive funding.

The best is grants. It was good to see in the ANPR the recognition that a lot of minority deposit institutions have affiliate nonprofits. Grants into those nonprofits are really useful.

They can use straight out common stock. They can use the old EQ2s and low-interest bearing evergreen loans. It used to happen. But we don't see them very much anymore. So it's really important that we talk about long-term, low-cost capital.

And what they don't need is that what they don't need when they don't ask for it-- sometimes they need this, but it's not all that often. What they don't need when they don't ask for it is deposits and short-term funding and any funding at market rates. I mean, it just is not helpful to put liabilities on a balance sheet when you don't have assets.

So the other things that would be useful are help with loans, loan loss reserves, guarantees, things that can make a bank examiner think that or can convince a bank examiner that perceived risk really is not there. And then also, systems, to some extent, this is a little trickier because you don't want to get too paternalistic about this. And you don't want to create a situation where a bank is imposing a system that is really not appropriate on a minority deposit institution or a smaller credit union.

But, boy, you've got a really good system for working with the SBA. That could actually be really useful to a lot of smaller institutions. So I think it's important that the ANPR recognizes the need for banks to support these institutions. I think it's critically important that we understand what kind of support is positive support and what kind of support is, let's be nice about it, and just say not very useful.

TAZ GEORGE: Ellen, thank you. Those are, I know, going to be really valuable comments considering the emphasis on minority depository institutions in the agency's proposals. And on your last point about and, really, your overarching point about looking to the most impactful kinds of activities and emphasizing those, I wanted to ask Oscar and other panelists about the ANPR's proposal of impact scores, which really is not spelled out in much detail.

But the general idea is for community development activities, could examiners evaluate the impact and responsiveness of those activities aside from the dollar amount, in addition to the dollar amount of the activities when determining how to make a conclusion for a bank in a given assessment area? And, Oscar, I was curious because you've covered so many different types of initiatives, what are the kinds of factors that you think should be considered in assessing the impact and responsiveness? And one just to call out from our questions that we've received thus far, keep putting them in. One person suggested, could community benefits needs analysis be conducted to help determine whether activities were impactful and responsive? So what do you think about that idea and other ideas about how to assess impact?

OSCAR PERRY ABELLO: Well, I'm just going to pick up where I left off. I think it's useful to have data and reporting and things. There's a lot of data that we're not collecting yet, especially when it comes to small business lending. Like we're still 10 years later waiting for section 1071 of Dodd-Frank to be implemented. This is the section of the law to collect data on the demographics of small business applications, not just loans, but every application that goes to a small business lender.

What happens to it? What is the race, gender, location of the applicants? That's been mandated to be collected for over a decade now or about a decade now. And we're still waiting for that to be implemented, OK? So we just know we don't know.

There's also a lot that banks know that the regulators aren't even asking for. Like where are your depositors? Can you just give us a zip code like where your depositors? So we can just see like, oh, half your depositors coming from the south side of Chicago. But 2% of your loans go to the south side of Chicago. Hello.

Banks have a zip code for every bank account there is. Do they not? Tell me if they don't. I think they do, right? OK, so anyway, there's data that can be measured. And it should be reported. And it should be public.

I'm saying that. Obviously, I have a bias. I'm a journalist. I want to see data. I want to see hard numbers. It helps me tell a story. But it cannot be the final measure.

Like even in an impact score, it can't be the be all and end all. If that data isn't the start or a conversation piece for a discussion between the banks and the communities, if it's just a report that goes out and you stamp passing grade on it, great, you've done enough, it still, again, fails what I would say is the crux of CRA, which is CRA is supposed to provide a platform for communities to have power over the banking system. And the conversation and the exchanges that are supposed to be there over time, like I could envision, for instance, the amount of capital going to the neighborhoods where Erica's borrowers live.

Like Erica's borrowers, they could have the same amount of capital over the next 10, 15 years. But that kind of capital changes. The activities that happen might change over time. And it might seem daunting.

It's like, well, how are we supposed to know, as banks? What are we supposed to do? Like that's the whole point. You're not supposed to know. You're supposed to go constantly have these conversations with communities.

And it's not just that you need to have them with Black, Hispanic, and other communities. Banks have these conversations about downtown, about the loop. They have these conversations about downtown Detroit. They these conversations about Manhattan. Banks have these conversations. They serve this quarterbacking kind of role in other communities.

And so if you, the big bank aren't willing to do that on the west side of Chicago, then, yeah, fund a CDFI or fund an MDI to convene those conversations and serve that role where you can't or aren't willing to serve it because you are serving it somewhere else. You're serving it. You're sitting on all these steering committees and advisory committees for economic development. You're sitting on boards of economic development corporations everywhere.

You're serving this quarterbacking role for other communities. If you're not supporting, and then you wonder, oh, how come no one is doing it for the south side? Like you. You're the one. Or fund someone else to do it. Like it should be no mystery.

And again, it's not a special case that we need to fund this work in LMI communities. It happens in non-LMI communities naturally. You just do it as banks. The point is, so who's going to do it for the LMI communities? Who's funding that? Who's taking on that burden?

And I would say regulators can also serve that function, right? I think that's part of what you're doing right now at the Chicago Fed is you're convening these conversations. All the other Federal Reserve banks, I know they're doing it. Regulators can do a lot more, I think, to convene these conversations on an ongoing basis.

ELLEN SEIDMAN: So I mean, it's incredibly powerful and incredibly important. I want to get into one little weedy piece here, which is related, which is data collection and, more importantly, public release of data in a timely, disaggregated, and geographically targeted way. And CRA works best when it's a partnership among the banks, the regulators, the communities, the media, the advocates, the whole crew. And that only works-- including local policymakers who are not bank regulators who don't have access to this data unless it's put out in the public. So particularly with respect to small business lending and community development lending, we have got to do a better job on providing data in a timely, disaggregated way to the public.

HORATIO "FRED" MENDEZ: Yeah. On the data piece, I would implore the Fed not to apologize for asking banks for data they already have and use, which will ensure greater clarity, accountability, and impact in the provision of financial services to low and moderate income and minority communities. Every bank I've worked at has the ability to geocode the location of their depositors without burden. This information is used all the time for business and product development, marketing, communication. Any institution that tells you otherwise is not being honest.

Now, while there may be a challenge in creating industry standards for the collection, most of this stuff is done all at a handful of third-party software platforms, except for the really big banks who have their own data platforms. But they all have pretty similar data fields. So this barrier is not insurmountable. And that information would be invaluable because there is that clear connection between where you get your deposits, what should be an assessment area, and where you're making your loans. Without that, we're just stuck guessing.

TAZ GEORGE: Thanks, Horatio. Bob and Erica, I want to turn to one of the questions or, actually, a couple of questions that came up in the chat relating to the diversity of leadership at a CDFI or a bank and whether CRA should consider that. I know this is something both of you brought up in your points. Do you think that CRA should look into the diversity of institutions' leadership?

ERICA KING: Absolutely. Everyone needs a voice, right? Every population needs representation and an advocate. We're quite naturally going to be able to speak up on things that affect us the most and to be an advocate for that same population. So absolutely. Organizations are doing it. Other organizations are doing it. Nonprofits are doing it. Absolutely, I think that should be something that the CRA Act looks into as well.

It helps shape policies. It helps have the conversations about what credit policies are in place that may be prohibiting or impeding upon the ability of other targeted populations being able to access credit and what inequities exist and what things can be done. Without that voice at the table representing that population, that bank will be doing itself a disservice.

BOB TUCKER: And who am I to disagree with Erica? Absolutely. And I will say, I mean, it's encouraging in one hand. And it's obviously taken some horrific events to get us to this place where the things that Erica has been talking about for decades, the things that my organization has been talking about for decades finally is part of the national conversation. And again, I think I go back to my original statements. Now's the time to be acting on this. If not, we're truly going to lose the moment.

HORATIO "FRED" MENDEZ: Yeah. And tied to that, I think, is just a very clear mandate that if a financial institution has any sort of substantive charge made against it with regard to a fair lending or equal credit violation, the agencies need to take these laws seriously and implement the hell out of them to begin with. It's ridiculous that our NPR station, Woodstock, and ProPublica are the one doing this research and finding this out. While the Fed, the OCC, and the FDIC all have the data.

But I think, at the end of the day, if a bank is found to have a substantive violation of any civil rights, equal protection, or consumer protection laws and irrespective of whether or not they settle without admitting guilt, their next CRA exam should be canceled. And they should immediately be downgraded needs to improve, period. That would eliminate their financial holding company status, prevent them from banking in any of the states and municipalities that have responsible banking ordinances.

And this is information all of the compliance people at these banks have. So the problem isn't with them. It's with those individuals up the food chain who make the decision that the risk of not addressing those issues are worth taking since the penalty isn't that bad. Well, I think it's time that changed.

TAZ GEORGE: Thank you. And one last question pulling out from the chat here. We touched on some of these things in the discussion so far. The question is, how can we fund institutions that have ambiguous underwriting profiles like cooperatives, land trusts, naturally affordable housing, and some others? I think many on the panel could comment. So I'll just toss it out to whoever may want to weigh in.

ELLEN SEIDMAN: So I think this is a place where the kind of examiner training that used to happen in the early '90s really needs to come back. Because both the CRA examiners and the safety and soundness examiners need to understand how to evaluate the risk of these kinds of important, community-focused kinds of entities. They can be funded. Come on.

There are CDFIs that do this for a living. This is not rocket science. But it requires judgment. It requires understanding. And if examiners don't get that kind of training and they don't get that kind of support up their line, then it's going to be left to the CDFIs who are wonderful but, among other things, they're a lot smaller than the banking sector.

BOB TUCKER: Well, and to build on Ellen's point, 30 years ago when my organization was founded, it was founded because there was a gap in Chicago's ecosystem for funding co-ops and social enterprises. That was our original charge. Now we've grown. We serve all sectors now. 30 years later, while we're serving all these sectors and they take up most of my balance sheet, we're still to go-to lenders for co-ops and social enterprises in Chicago. So nothing's really changed.

OSCAR PERRY ABELLO: Yeah. And just to add on, there's a long tradition of lending to co-ops in a lot of places. There's one major barrier that I'm still always shocked that it still exists. The SBA still requires a personal guarantee for 7A loans and for 504 loans, which personal guarantee means if the loan goes bad, the lender has to go after the borrower's assets first before trying to get the guarantee enforced, right? Which is like, well, why is there a federal guarantee? Isn't the point of the guarantee to make it possible to lend to someone who may not be able to, who may not have assets that they could put up for a personal guarantee?

So that's a regulation. And it's not a CRA regulation. But like imagine the implications of, OK, let's eliminate the requirement for a personal guarantee. How many more, how much easier would it be to make small business loans using SBA guarantees for borrowers on the south or west side of Chicago? Like, wouldn't that make it easier?

That would also make it a lot easier for cooperatives, cooperative businesses, worker cooperatives, community co-ops to get loans, housing cooperatives, like businesses where there is no owner to sign a personal guarantee. Because the whole point of starting your co-op is so that we can share the ownership of this business. And again, to loopback to something Taz brought up about impact scores, like, OK, great. So let's put a higher impact score on lending to co-ops, lending to cooperative businesses.

It'll still be hard to lend to cooperative businesses if you can't get around that personal guarantee requirement. That's a regulator thing too. Regulators, you like to see personal guarantees on the loans. OK. OK, great. But again, it's a cooperative.

There is a bank out there, the National Co-operative Bank, they just don't use the personal guarantees. I mean, they have other constraints. It's hard for them to loan to startups. But they make loans without personal guarantees all the time. They've been around since the '70s, right? OK.

So that's an issue where when I talk about CRA is not enough. It's like, well, CRA is not enough. But yes, let's use the lens of, if we want to lend more to small businesses using federal guarantees as a way of satisfying our CRA requirements, yeah, we need to go talk to the SBA about the personal guarantee constraint on their borrowing. That's one thing.

And well, yeah, for groups of strange underwriting profiles, I mean, that's a big one. And I think it would be really helpful again to think about CRA in that way. Like if we can't meet these credit needs out here because of something else, well, let's go fix that something else. And then we can meet our CRA obligations more easily.

TAZ GEORGE: Thank you, Oscar. I have the very difficult task now to try to wrap up this discussion, which has been so rich and full of insights on the 99 questions that the board's proposal asks for feedback and more. I want to give a big, big thank you to our panelists for sharing your comments today. I know if we were all in a room, there'd be a loud standing ovation for you right now. And I'm doing it at home.

And I want to also thank everyone who's been watching from work or from home. I hope this has helped to spur your thinking about what ideas you have for how to strengthen CRA. And as Jason mentioned before, we're still in an active command period. So between now and February 16th, you can provide your ideas to the board and the other agencies as we formulate the rulemaking process and keep things going.

And we really want to gather as much feedback as we possibly can. We'll be sharing information about how to submit a comment and other details of the presentation following the event with everyone who registered today. So with that, thank you again, everyone. Have a great rest of your day and afternoon.