FDIC Scrutinizes Banks for Redlining Practices

WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) isn’t just insuring deposits; they’re also keeping a close watch on whether banks are fulfilling their obligations to all communities. Today, the agency dropped a list of state nonmember banks recently put under the microscope for Community Reinvestment Act (CRA) compliance, sparking renewed debate about fair lending and access to credit.

The CRA, a 1977 law, aims to force banks to invest in the neighborhoods they serve, especially low- and moderate-income areas. It’s a response to decades of redlining – the discriminatory practice of denying services based on zip code – that systematically deprived communities of color of vital resources. These evaluations, covering February 2024, are the FDIC’s attempt to ensure banks aren’t reverting to those old, damaging habits.

While the FDIC isn’t handing out prison sentences, these ratings carry weight. A poor CRA score can hinder a bank’s ability to merge, acquire other institutions, or even expand its operations. It’s a public shaming of sorts, forcing banks to address deficiencies in their lending practices. The agency is obligated to make these evaluations public, thanks to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

The full list of examined banks, complete with their ratings, is available online. The FDIC also maintains a comprehensive archive dating back to July 1990, a digital paper trail of banking accountability. For those who prefer a hard copy, the FDIC’s Public Information Center in Arlington, VA, is open for business (877-275-3342 or 703-562-2200).

But accessing the raw data is only half the battle. The real question is whether these evaluations translate into meaningful change. Are banks genuinely reinvesting in underserved communities, or are they simply checking boxes to appease regulators? The Grimy Times will continue to dig into these reports, exposing any discrepancies and holding banks accountable for their promises.

Individual bank evaluations are also available directly from the banks themselves, as required by law. Contact LaJuan Williams-Young at the FDIC (703-470-0201) for further inquiries. The May 2024 list of banks examined for CRA compliance and the monthly list are attached for review. This is not just about banking; it’s about the economic health and future of our communities.

RELATED: FDIC Scrutinizes Banks Over Community Lending Practices

RELATED: FDIC Approves RFI on Uninsured Deposits Amid Bank Failures