American Banker, March 3, 2023, The CRA Has Little Impact On Household Credit. Can Regulators Change That?
The Federal Reserve Bank of New York published a study that found that CRA did virtually nothing to increase credit access or change borrower outcomes in designated low- and moderate-income communities, where households live on less than 80% of the area median income.
Kevin Hill, Senior Policy Advisor at the National Community Reinvestment Coalition, a Washington, DC-based advocacy group, said the report points to needed changes around the treatment of originated versus purchased loans.
“The study provides evidence that loan purchases are having little impact on the overall supply of credit,” Hill said. “We also suggested loan purchases be examined separately from loan origination, which isn’t something CRA currently does, and then, ultimately, for loan origination receive more weight.