Deadline ahead for commenting on latest CRA proposed revisions; nearly 200 filed so far

Friday is the deadline for commenting on federal banking regulators’ proposal to modernize and streamline proposed changes to rules implementing anti-redlining laws; to date, nearly 200 comments have been filed.

The proposal was issued in May jointly by the three banking regulators; it was given a 90-day comment period.

According to the agencies, the proposal is intended to:

  • Expand access to credit, investment, and basic banking services in low- and moderate-income communities. Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit. The proposal would promote community engagement and financial inclusion. It would also emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities.
  • Adapt to changes in the banking industry, including internet and mobile banking.The proposal would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
  • Provide greater clarity, consistency, and transparency.The proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency. It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities.
  • Tailor CRA evaluations and data collection to bank size and type.The proposal recognizes differences in bank size and business models. It provides that smaller banks would continue to be evaluated under the existing CRA regulatory framework with the option to be evaluated under aspects of the new proposed framework.
  • Maintain a unified approach.The proposal reflects a unified approach from the bank regulatory agencies and incorporates extensive feedback from stakeholders.

The unified approach touted by the agencies was a sharp departure from the situation created with the 2020 adoption of a final set of CRA revisions by the Office of the Comptroller of the Currency (OCC), then led by Joseph P. Otting. Otting issued that final rule without the participation of either the Fed or the FDIC, even though the FDIC (then headed by Jelena McWilliams) participated in the proposed rulemaking. The Fed declined to attach to either the proposed or final rule.

Hsu, upon taking the helm as acting comptroller, proceeded toward a rescission of the 2020 rule, effective this January. Current rules under the federal anti-redlining law have reverted generally to a version all three banking agencies adopted in 1995.

The CRA, enacted in 1977, encourages banks to address the credit needs of their local communities, including low- and moderate-income (LMI) neighborhoods, in a safe and sound manner.

Community Reinvestment Act (CRA) proposal