American Banker: Four Big Questions As CRA Proposal Nears Official Release

American Banker, Dec 8, 2019: Four Big Questions As CRA Proposal Nears Official Release

After nearly two years of internal discussions, regulators are finally ready to propose reforms to the Community Reinvestment Act on Dec. 12. Expect the reaction from within the industry and outside it to be swift and loud. When the Office of the Comptroller of the Currency asked the public to weigh in on CRA reform in 2018, it received more than 1,500 comments.

The OCC has said its priorities for CRA reform are built around enhanced “clarity” and “transparency,” such as providing a concrete list of acceptable CRA activity and insight into examiners’ scoring methodologies, as well as ensuring that banks’ footprint — which today may far exceed physical branch networks — corresponds with their CRA compliance.

All of that, in theory, should strengthen bankers’ efforts to invest in the communities they serve and benefit a broader segment of the public. But reality is rarely so tidy.

“Do bankers who do CRA investing expect to see their lives become a whole lot easier with the reform?” said Julie Hill, a professor at the University of Alabama School of Law. “I kind of doubt it. When’s the last time regulatory change outside of Congress implemented a tidal wave of change for banks that made their lives easier? I don’t remember that.”

While a consensus has emerged that CRA needs to be modernized, the stakes are high, and the consequences of any changes will likely reverberate for decades.

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