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Bill

SB 1398

AN ACT CONCERNING COMMUNITY REINVESTMENT BY BANKS AND CREDIT UNIONS.

2025 Regular Session

Connecticut bill requiring banks and credit unions to reinvest in local communities through lending and development, addressing capital access inequality in underserved areas.

FILE NO. 292
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Bill Summary · SB 1398

Legislative bill overview

SB 1398 mandates that banks and credit unions operating in Connecticut reinvest capital back into their local communities through lending, investment, and community development activities. The bill establishes requirements and oversight mechanisms to ensure financial institutions meet community reinvestment obligations, likely building on or strengthening existing Community Reinvestment Act (CRA) compliance at the state level.

Why is this important

Financial institutions often concentrate lending in affluent areas while underserving lower-income and minority communities, perpetuating economic inequality. This bill aims to ensure equitable access to credit and investment capital for community development projects, small businesses, and housing in underserved areas—addressing a documented market failure where banks profit from communities but don't reinvest locally.

Potential points of contention

  • Regulatory burden vs. community benefit: Banks argue compliance costs increase expenses passed to consumers; supporters counter that equitable lending is a public good worth the investment
  • Definition and measurement challenges: Determining what counts as "community reinvestment" and how to fairly measure compliance across different institution sizes and geographic areas
  • Competition concerns: Smaller credit unions may struggle with compliance costs relative to larger banks, potentially disadvantaging community-focused lenders

Compiled from official sources — confirm details with the bill’s official record.

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