WASHINGTON — New Jersey lawmakers have introduced a bill in the state that would create a state-level Community Reinvestment Act, one that would apply to more financial institutions than its federal counterpart.
The bill would extend CRA review beyond banks to online institutions, credit unions and nonbank mortgage lenders. Other states, including Illinois, Massachusetts and New York have adopted similar versions of the legislation, but the New Jersey version comes just as federal regulators roll back community lending protections.
"New Jersey's Community Reinvestment Act demands accountability from all financial institutions profiting here — banks, non-banks and more," said N.J. state Sen. Britnee Timberlake, a Democrat and the bill's primary state senate sponsor. "With federal protections fading and corporations extracting wealth without reinvesting, our state must step up to protect vulnerable communities and ensure fair reinvestment where it's needed most. Modeled after the federal CRA, the state version expands oversight and reinforces commitments to reduce foreclosures and boost lending to small businesses — including those owned by women, veterans, and minorities."
Under the Trump administration, bank regulators
Bank groups sued over the rule, saying that the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.
In withdrawing the rule, bank regulators returned their CRA regime to how it's existed for several decades, dating back to its last update in 1995.
The New Jersey law would introduce a more rigorous CRA rule in one of the country's largest states that does not already have a state-level CRA law. Among other provisions, the bill would make New Jersey just the second state after Illinois to include a disparity study among its CRA enforcement mechanisms. Some of the provisions were championed by the National Community Reinvestment Coalition and state advocacy groups.
"It's a happy day seeing this bill introduced, but the hard work won't be done until the New Jersey legislature has passed these vital supports for marginalized communities into law," said NCRC President and CEO Jesse Van Tol. "With federal modernization of CRA stalled, and the persistent efforts by the banking lobby to keep it that way, it is especially important that states work to pass their own framework."
New Jersey is just one state looking to double down on local consumer protection laws and enforcement now that federal oversight looks to slacken during the Trump administration. California, for example, is also considering its own CRA law.
The New Jersey Bankers Association did not immediately return a request for comment.
