By Lydia Wheeler - 02/18/16 12:41 PM EST
The National Community Reinvestment Coalition (NCRC) is calling on financial regulators to declare Flint, Mich., a designated disaster area in response to the city’s water crisis.
The group wrote to federal officials on Thursday asking them to encourage banks to make loans to the city and its residents to help repair or replace corroded pipes that contaminated the water supply with lead.
The NCRC said federal agencies declared disaster areas after Hurricane Katrina and used the Community Reinvestment Act (CRA) to boost loans and investments for affected communities.
The organization represents local community investment groups. Their letter was sent to Federal Reserve Chairwoman Janet Yellen, Comptroller of the Currency Thomas Curry and Federal Deposit Insurance Corporation Chairman Martin Gruenberg.
The NCRC said the amount of distress caused by unsafe levels of lead in Flint’s drinking water has made banks hesitant to offer home loans because of requirements for houses to have potable water.
“One of the worst outcomes of this crisis would be withdrawal of bank credit and capital for this devastated city,” the letter said.
In a statement, NCRC President and CEO John Taylor said this sort of crisis requires a collaboration between the government and private sector institutions, including banks.
“This is precisely why a community has its wealth stored in financial institutions — no other individual or corporation has the financial capacity and responsibility to respond to catastrophic events like a financial institution,” he said.