Community groups across the U.S. are mobilizing to oppose a plan by President Donald Trump's bank regulators to radically remake a landmark law designed to combat discriminatory lending, saying the proposal would undercut that goal.
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The groups say the proposed regulation, which Otting released jointly with the FDIC on Dec. 12, will weaken the Community Reinvestment Act, a 1977 law that requires banks to lend to lower-income neighborhoods to end the discriminatory practice called redlining. It also gives regulators the power to judge how well the lenders comply, a process that banks say is often arbitrary and lacks transparency.
The activists argue that Otting's proposal would give lenders a wide berth to satisfy the law's requirements through big dollar projects — such as sports stadiums — without consulting local residents.
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[Joseph] Otting, who is comptroller of the currency, has strongly defended his proposal, saying he is seeking to offer greater incentives for banks to extend loans to creditworthy borrowers in underserved neighborhoods and to think creatively about helping their communities.