American Banker: Community banks seek broader exemption from CRA changes

American Banker, March 12, 2020: Community banks seek broader exemption from CRA changes

Community banks are asking regulators to broaden the scope of institutions that would be granted regulatory relief from a new Community Reinvestment Act framework.

The CRA reform plan proposed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. would allow banks with under $500 million of assets to stick with the old regime.

But community banks and industry representatives say that threshold should be closer to $1 billion to relieve smaller banks of the compliance ordeal of transitioning to a new framework.

Meanwhile, community reinvestment advocates, who assert the OCC and FDIC’s plan would hurt key groups that rely on the CRA, say a broad exemption for small banks raises further doubts about the overall proposal.

“If you raise the exemption threshold, you end up in a situation where the vast majority of FDIC banks are exempt from the new system, which begs the question — why sign on to the proposal at all if you’re preserving the way CRA is now for most banks?” said Jesse Van Tol, CEO of the National Community Reinvestment Coalition.

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