The effort to shift government policies to help local news survive has a new tack: asking federal regulators to give banks better Community Reinvestment Act evaluations if they lend to news outlets.
The pitch is made in an opinion piece for American Banker by Steven Waldman, founder and CEO of the Rebuild Local News Coalition, and one of his board members, Julie Sandorf, president of the Charles H. Revson Foundation. They argue, "Community news organizations are often integral to the vitality of a community. Studies, and common sense, have indicated that communities that lack good local news have less civic involvement, more corruption, higher taxes and lower voter turnout. So, isn't it about time for the government to encourage banks to treat local news as an essential community service?"Waldman and Sandorf note that banking regulators are considering changes to regulations governing the CRA, which Congress passed in 1977 to remedy the discriminaton against low- and moderate-income communities, and said a bank has an obligation to "meet the credit needs of its entire community." Regulations enacted in 1995 require CRA performance reviews to consider banks' responsiveness to needs for community investment and community development.
"CRA incentivized banks to join forces with the public sector and philanthropy to create new credit and investment products that have, in turn, leveraged tens of billions for such essential community infrastructure as affordable housing, small business development, primary health and day care centers and food markets. It has spurred the establishment of 'mission driven' lenders, such as community development financial institutions, which specialize in financing investment in the unique needs of underinvested communities and businesses.
So, a coalition of local news organizations have asked the Federal Reserve Board, the Comptroller of the Currency and the Federal Deposit Insurance Corp. to make what they call "some relatively minor changes that could have a major impact on the health of community news." And right now, banks need encourgement to lend to news organizations, Waldman and Sandorf write.
The news organizations made these specific recommendations to the banking regulators: Make clear that certain types of local news — provided by small businesses for low- and moderate-income communities — count as "community supportive services," just like "educational services" do now. "Regulators should make it clear that educating residents on civic matters through local news should count as educational services," Waldman and Sandorf write. Also, "Banks should advertise more in local news outlets. The law already requires that banks make their products and services known to residents of low- and moderate-income communities. Doing some of that marketing through local media will help them promote their services while simultaneously strengthening the local news that can, in turn, strengthen the community."