New rules would stop the ‘CRA Goldmine’ that lets progressive groups extort millions from financial institutions.
For decades, leftwing activist groups have operated a sophisticated shakedown racket targeting American banks, using a well-intentioned anti-redlining law as a weapon to extract millions in donations, according to the Trump administration’s bank regulators. That gravy train may finally be coming to an end. On Friday, the Trump administration’s bank regulators proposed sweeping reforms to the Community Reinvestment Act that would close what one nonprofit consulting firm brazenly advertised as the “CRA Goldmine,” as detailed in the agencies’ announcement.
The scheme works like this: when banks seek approval for mergers, acquisitions, or new branches, community organizations can challenge their CRA record, per the proposed rules from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The threat of a poor grade, which can delay or derail these plans, gives activist groups enormous leverage to demand grants and financial commitments. Bridge Philanthropic Consulting, which advises nonprofits on fundraising, literally published a guide titled “The CRA Goldmine: How Your Nonprofit Can Unlock Millions in Bank Funding,” as the firm itself promoted. They were not even trying to hide what this was, a regulatory extortion racket dressed up as community advocacy.
The proposed rules from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation would not prevent banks from donating to community organizations. What they would do is ensure that these donations actually support legitimate community development programs rather than funding progressive activism, according to the agencies. Banks seeking CRA credit for grants would have to demonstrate that the money directly supports specific programs in their local assessment areas, not just general advocacy work that often has nothing to do with helping communities.
Perhaps most importantly, the new rules would require grant recipients to commit in writing that funds will be used for qualifying activities, as outlined by the regulators. Large bank grant recipients would also have to prove that administrative costs do not exceed 15 percent, a direct shot at the bloated nonprofits that have been living high on the hog while delivering minimal actual community benefit. The agencies are even asking whether grants and donations should be excluded from CRA consideration entirely, which would eliminate the regulatory leverage that makes this shakedown possible.
Comptroller of the Currency Jonathan Gould did not mince words about what these reforms are designed to stop. “Today’s proposed reforms will help ensure the CRA is no longer used as a social credit score for banks, nor as a funding mechanism for activist NGO networks under the guise of community development,” he said. That is exactly what has been happening, per Gould’s statement. The CRA, enacted in 1977 to combat actual redlining, has been weaponized by progressive groups to enforce their political agenda and fund their operations.
The current system is a perfect example of how well-meaning regulations get captured by special interests, as the administration’s proposal notes. Banks are effectively forced to pay protection money to activist groups in order to get routine business approvals. These groups then use that money to fund more activism, creating a self-perpetuating cycle of extortion and political advocacy. Meanwhile, actual community development often takes a back seat to funding progressive causes and paying nonprofit executives exorbitant salaries.
The Trump administration’s proposal would restore the CRA to its original purpose, ensuring that banks are evaluated on their actual service to communities rather than their willingness to fund activist organizations. This is a win for community banks that have been squeezed by the current system, a win for communities that will see more actual development funding, and a major loss for the progressive activist industry that has been living off this regulatory arbitrage for far too long.
Expect the usual hysteria from the left about how these reforms will hurt minority communities. But the reality is that the current system has been hurting these communities by diverting resources from actual development to activist coffers. The CRA should be about banking services, not about creating a slush fund for progressive nonprofits. The Trump administration is finally putting a stop to one of the most corrupt arrangements in American finance.
Providence watches over the bold.
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