|The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have jointly proposed sweeping changes to modernize the agencies’ regulations under the Community Reinvestment Act (CRA). The intent is to overhaul CRA assessment boundaries, criteria for activities earning credit in CRA exams and how banks are scored overall for their performance. These changes are expected to soon be published in the Federal Register.|
The CRA was enacted in 1977 to encourage insured depository institutions to help meet the credit needs in their local communities, including low- and moderate-income neighborhoods. Because the banking industry has changed dramatically since the law’s enactment and its regulatory changes in 1995, the agencies’ proposed rules are intended to address digital banking changes and to further encourage lending to low- and moderate- income borrowers living in underserved communities, such as rural areas and tribal lands far removed from urban centers where bank branches are concentrated. The proposed CRA rules would apply to federally insured depository institutions supervised by the FDIC and OCC, which conduct approximately 85 percent of all CRA activity. The third CRA regulatory body Federal Reserve Board of Governors did not sign on to these proposed changes.
The main concerns are that the proposed metric focuses more on the quantity rather than the quality of investments and that broadened assessment areas may fail to meet local community needs. There is also a worry that expansion of what counts for CRA credit may undermine local needs. Larger investments may be incentivized over potentially smaller and more impactful ones to the community. The American Banker provides an outline of changes. ANHD, who has provided leadership on this issues in NY, gives a more critical community perspective.
The House Financial Services Committee is scheduled to hold two hearings in January (14th and 29th) to examine the proposed CRA changes. Rep. Nydia Velazquez, Rep. Gregory Meeks, Rep. Carolyn Maloney, Rep. Alexandria Ocasio-Cortez, Rep. Lee Zeldin and Rep. Peter King are our NY representatives who serve on the committee.
NYHC will be writing comments and hosting an educational event on the topic on January 16th, please see event announcement below.