Financial institutions: California Community Reinvestment Act.

Assembly Member Bonta's California Community Reinvestment Act would establish new oversight requirements for banks, credit unions, and certain mortgage lenders and money transmitters operating in California. The legislation requires covered financial institutions to demonstrate their commitment to meeting local communities' financial service needs, particularly in low- and moderate-income areas and communities of color.

Under the bill, the Commissioner of Financial Protection and Innovation must assess each institution's community service record at least every three years, considering factors such as branch distribution, mortgage lending patterns, small business loans, and participation in community development programs. Institutions receive one of five ratings ranging from "Outstanding" to "Substantial Noncompliance." Those rated "Needs to Improve" or "Substantial Noncompliance" must submit improvement plans and face restrictions on receiving state deposits or contracts.

The measure creates a Community Reinvestment Fund to support implementation and requires the commissioner to conduct regular studies identifying geographical and policy-related disparities in financial services access. Financial institutions must solicit public input when assessing community needs and make their performance evaluations publicly available. The commissioner may impose administrative penalties up to $100,000 on institutions that consistently fail to meet their obligations.

Beginning in 2027, the legislation mandates collaboration between the commissioner and Civil Rights Department to examine historical patterns of discrimination and develop rules promoting investments in traditionally underserved areas. The assessment framework considers institutions' efforts around mortgage modifications, affordable housing preservation, and support for disaster-impacted communities.