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There are two principal challenges to face when pursuing CRA financing for equitable development practices: the evolution of the banking industry and the difficulty of building an effective coalition.
Evolution of the Industry
Recent conservative federal provisions have increased the consolidation of financial institutions , which has allowed insurance companies and securities institutions to acquire banks without the restrictions of CRA. These provisions have also encouraged the formation of mega-banks, which simply have less local connection and allegiance. The size, distance, and company diversity inherent in these larger institutions may require more investment by CRA advocates in local communities in putting together a coalition with sufficient strength to capture the institution's attention. It may force a coalition to target local banks instead.
Maintaining Coalition
The other main challenge involves
maintaining the coalition to achieve reinvestment goals. It is critical
that the coalition agree on its goals, structure and process early in the
campaign,
and stick to the agreement. The leaders need to balance the needs of stakeholders
in a manner that keeps everyone moving forward together.
Any coalition faces a difficult task in setting reinvestment goals. These goals must relate directly to community needs and stakeholder interests. The goals must be realistic and achievable.
Since CRA campaigns can last a number of months, conflicts arise between stakeholders' short-term needs and the longer timeline of the campaign. Even after the bank makes a commitment, tensions can continue depending on what compromises have been made. As much as possible, set ambitious goals so that all parties see benefit in the final agreement. Resist bank attempts to undercut alliances by making grant offers to key coalition members contingent on their abandoning the campaign.
Time is of the essence during CRA negotiations to keep the issue in the mind of the bank and to not lose partners. Merger approvals from regulators typically last 20 to 30 days after a bank's submission of the application. This timeline must be kept in mind.
Sense of scale is critical. From the beginning of planning the bank negotiations, it is critical that the community team have a clear idea of its goals. From the goals flow the decisions regarding the scale of the negotiations in terms of time, complexity, targets for pressure and support, and other key elements.
Composition of the negotiating team is critical. The team should include the full range of affected community residents, public officials, business people, etc.
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