Letter to Regulators on Proposed CRA One-Ratio Reform

September 17, 2019

The Honorable Jerome H. Powell
Chairman, Federal Reserve Board of Governors
20th Street and Constitution Avenue, NW
Washington, DC 20551

The Honorable Joseph Otting
Comptroller of the Currency
400 7th Street, SW
Washington, DC 20219

The Honorable Jelena McWilliams
Chairman, Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Dear Chairman Powell, Chairman McWilliams, and Comptroller Otting:

We, the undersigned organizations, are offering our thoughts regarding major areas of Community Reinvestment Act (CRA) reform now because we understand that a Notice of Proposed Rulemaking (NPR) could be issued as soon as the end of September or in October. The CRA is a vital law that has leveraged trillions of dollars of loans and investments in low- and moderate-income (LMI) neighborhoods because its examination and review process features public accountability and transparency. One major reason for CRA’s success is that it has fostered collaborations among banks, community organizations, and public sector agencies that have developed lending and investing programs and products.

Like you, however, we believe that CRA needs an update to take into account changes in the banking industry and to improve data and evaluation methods. At the same time, it is vitally important to proceed carefully and to refrain from enacting reforms that would undercut CRA’s effectiveness.

The one ratio must not become the determinative measure

Some of us have attended recent meetings convened by the Office of the Comptroller of the Currency (OCC) and have also reviewed the OCC brochure, Community Reinvestment Act (CRA): Opportunity for Modernization. The one ratio described in the brochure is of great concern to us. The ratio will compare “historical CRA activity compared with domestic deposits” and will contribute to a “presumptive rating.” The ratio will be calculated for each of the bank’s assessment areas and for the overall bank’s performance.

As we have stated in our comment letters regarding the Advance Notice of Proposed Rulemaking (ANPR), if a metric of this nature is determinative of the CRA rating either at the assessment area or overall, it will likely distort CRA activity in a way that is not responsive to local needs. In order to boost the numerator of the ratio, banks will likely favor large dollar community development activity or purchases of mortgage backed securities (MBS). In response to these concerns, the OCC said in the meetings that it will limit any transaction to 10 percent of total CRA activity; this limit is supposed to guard against over-reliance on large deals or secondary market activities. However, these limitations still leave room for heavy use of large deals or secondary market activities since activities approaching 10 percent of CRA activity still translate into a large dollar amount for a loan or an investment. In addition, a bank can fulfill its CRA responsibilities by a number of large deals at 9 percent each of total CRA activity. We remain concerned that small transactions meeting local needs such as microloans for very small businesses or mortgages for LMI borrowers, particularly in lower cost areas of the country, will receive less attention from banks.

The one ratio also has the potential to interfere with sound business practices. If empirical benchmarks for passing ratings are set too high during economic downturns, banks could feel pressured to seek large deals when smaller loans or other financial assistance could better support communities and avoid over-leveraging banks. Different agency heads under various  administrations could also adjust ratios that promote particular policies but do not take local credit needs into account. CRA examination regimes have never involved establishing certain ratios corresponding to certain ratings because reducing evaluations into one or a few ratios does not allow banks flexibility to meet needs commensurate with their capacity and business models. Since exams now use a number of criteria, a bank can compensate for lackluster performance on one criterion with better performance on another criterion. A one ratio reduces flexibility of this nature and constrains activity by favoring larger deals. Concerns over possible credit allocation and constraining activity prompted Senator Proxmire, the architect of CRA, to remove a ratio similar to the one ratio from the original draft of the CRA statute.

A one ratio approach will make CRA exams less transparent and will deter public input. If the one ratio replaces existing metrics such as percent of loans to LMI borrowers or communities, it will be harder for community organizations and members of the public to understand which needs banks are responding to and which ones they are neglecting. A one ratio expressed as a percentage does not inform the reader of an exam of basic information such as the number and percent of home or small business loans or how many branches or deposit accounts a bank is offering to LMI people and communities. Lacking this information, a member of the public cannot intelligently comment on a bank’s performance in his or her area or cannot compare an examiner’s analysis of publicly available loan data to his or her own. A major purpose of the law, public input on a bank’s responsiveness to needs is thwarted by a one ratio approach that replaces the current performance measures.

The OCC says performance context analysis would still be used in a metric-based system, but it would be difficult to figure out how this analysis could be executed. Lacking information on the mix of retail and community development activities, an examiner or member of the public could not use performance context analysis to judge how responsive to community needs the activity mix is or whether the bank is fully using its capacity or business model to respond to the needs.

Assessment areas must retain areas with branches and include others with significant business activity

We are pleased that the OCC and the other agencies are contemplating changes to assessment areas on CRA exams that also preserve areas with branches as assessment areas. Research has shown that branches increase safe and sound home mortgage lending and small business lending to LMI borrowers and communities. While retaining areas with branches, the OCC has proposed establishing assessment areas for geographical areas from which banks are gathering significant amounts of deposits via the internet and other non-branch means. This is a positive proposal since it will capture additional geographical areas in which banks are conducting significant business activities and in which banks’ CRA performance should be assessed.

We also suggest that the agencies consider adding geographical areas in which banks are making significant amounts of retail loans but are not gathering deposits to ensure that banks with different business models and product mixes are being assessed in geographical areas in which they are offering high volumes of products. The agencies should also carefully consider any thresholds such as percent of deposits or loans for designating assessment areas so that they capture the great majority of a bank’s business activity. Reforms to assessment areas should also increase emphasis on small metropolitan areas, rural counties, Native American reservations, and economically distressed areas.

Clarifying activities that count with a non-exhaustive list with a focus on LMI people and communities

We appreciate that the agencies seek to clarify the activities that count on CRA exams so that confusion and uncertainty do not deter the financing of innovative and responsive community development activities. Development of a list of specific activities is desirable but it must not be an exclusive list that prevents the financing of new activities that are responsive to unforeseen or new community needs.

We are pleased that the Comptroller stated that the focus must remain on LMI borrowers and communities. Consideration of activities in LMI communities should promote integration and economic diversity but should not finance displacement of LMI households or very small businesses in gentrifying neighborhoods.

The threshold for the definition of a small business should not be raised to $5 million in revenues from the current threshold of $1 million. Since the vast majority of small businesses have revenues under $1 million, raising the threshold by that extent will likely divert lending activity away from small businesses that need it the most.

Care must be taken in developing any proposal that uses multipliers as a means to motivate increased activity. We understand that the agencies are considering multiplying the dollar amount of equity investments by a factor of two in order to motivate banks to increase their investment activity. This proposal could inadvertently reduce the number of investments since some banks may conclude they can earn the same amount of credit on a CRA exam if they reduce their investments by half. The objectives of increasing certain types of financing are better addressed through adjusting weights assigned to the various component tests.

Mergers must continue to receive rigorous scrutiny and public input

We are also concerned that one-ratio based examinations will over-simplify the complexities of CRA performance and will result in agencies rubber stamping merger approvals as long as banks hit certain one ratios and ratings. In addition to past CRA performance, agencies are required by law to consider the future impact of mergers on banks’ abilities to meet the convenience and needs of communities. A one-ratio based exam could result in agencies belittling the convenience and needs factor as long as banks pass muster with their one ratios. Likewise, public input regarding a merger’s impact on convenience and needs could also receive little agency consideration under a CRA examination regime focused on the one ratio.


The agencies need to consider carefully the comments received on the ANPR in developing a proposed rule. Most comments opposed the one ratio as a determinative measure because it would frustrate banks’ ability to meet local needs consistent with safety and soundness. At the same time, we appreciate that the agencies are seeking to increase clarity on CRA exams in response to ANPR comments. We also reiterate our view that CRA must be focused on LMI people and communities, must not expand consideration of philanthropic or other activities that do not focus on LMI people or communities, and must not result in CRA exams that exempt more banks from evaluations of community development financing or the provision of bank branches and services. We also want to remind the agencies of our recommendations for enhancing CRA that include collecting and disseminating data on community development financing, reforming CRA ratings, including affiliates on exams, and including examination of activity in underserved counties and census tracts. Finally, if the agencies cannot agree on specific changes to the regulation and have too many unanswered questions, the agencies should issue another ANPR instead of a NPR.

Thank you for your consideration. Contact Jesse Van Tol, CEO of NCRC, on 202-628-8866 if you have any questions.



National Groups

National Community Reinvestment Coalition

Allied Progress


Americans for Financial Reform 

Center for Responsible Lending

Consumer Action

Credit Builders Alliance

HomeFree USA, Inc.

Housing Assistance Council

The Leadership Conference on Civil and Human Rights


National Alliance of Community Economic Development Association (NACEDA)

National Coalition for Asian Pacific American Community Development (CAPACD)

National Community Stabilization Trust

National Consumer Law Center (on behalf of its low income clients)

National NeighborWorks Association

National Trust Community Investment Corporation

National Trust for Historic Preservation

National Urban League

Prosperity Now

Public Citizen

The Democracy Collaborative

UnidosUS (Formerly NCLR)

Upward Mobility Initiative


Alabama Association of Community Development

Building Alabama Reinvestment

Center for Fair Housing, Inc.

Community Action Association of Alabama

Fair Housing Center of Northern Alabama

MLK Avenue Redevelopment Corporation

National Business League of Alabama

Titusville Development Corp

Urban Impact, Inc.


Arizona Housing Coalition 

Behold Charities International

Chicanos Por La Causa

Junto Affordable Housing Inc.

Newtown Community Development Corporation

Prima County Community Advocate


Community Resources Technicians

People Trust



Access Plus Capital

American GI Forum

Azul MSI

Black Business Association

California Coalition for Rural Housing

California Community Economic Development Association

California FarmLink

California Housing Partnership   



California Resources and Training

California Reinvestment Coalition

CDC Small Business Finance

Center for Urban Economics and Design Chicana Latina Foundation

Central Valley Urban Institute

City of Livingston

Council of Asian Americans Business Associations (CAABA)


Democracy at Work Institute

EAH Housing

El Concilio of San Mateo County 

Fathers and Families of San Joaquin

Haven Services

Housing Coalition Educators


Inland Empire Latino Coalition

Law Foundation of Silicon Valley

Montebello Housing Development Corporation

Mutual Housing California

The National Cultural Center of the Native Americans   

Neighborhood Housing Services of the Inland Empire

Northern Californian Community Loan Fund


Opportunity Fund

Peoples’ Self-Help Housing

Robert Zdenek Associates- Connecting Communities

Rural Community Assistance Corporation

San Francisco African American Chamber of Commerce

Self-Help Enterprises

Small Business Majority

Tenderloin Neighborhood Development Corporation (TNDC)

The Central Valley Urban Institute

The Greenlining Institute

UCI Paul Merage School of Business

Vermont Slauson Economic Development Corporation


Douglas County Housing Partnership

First Nations Oweesta Corporation

Mi Casa Resource Center


Concerned Black Clergy Council of Waterbury

Connecticut Citizen Action Group

Hartford Community Loan Fund

Neighborhood Housing Services of Waterbury

Women’s Institute for Housing & Economic Development

Yale University Program for Recovery and Community Health


Be Ready Community Development Corporation


Central Baptist Community Development Corporation 

Delaware Community Reinvestment Action Council, Inc.

Edgemoor Revitalization Cooperative, Inc.

Ellendale Community Civic Improvement Association

Habitat for Humanity of New Castle County

Housing Alliance Delaware

National Council on Agricultural Life & Labor Research Fund, Inc. (NCALL)

Nehemiah Gateway Community Development Corp.

Neighborhood House, Inc.

University of Delaware

District of Columbia

African Diaspora Directorate

Advocates for Elder Justice, Hilda & Charles Mason Charitable Foundation, Inc.

Anacostia Economic Development Corporation

Central American Resource Center (CARECEN)

Housing Up

Latino Economic Development Center

Laura Zam Enterprises


National Association of American Veterans, Inc.

Network for Developing Conscious Communities

Partners for Livable Communities

Romijen Wellness



Affordable Homeownership Foundation Inc.

Allapattah Collaborative CDC

BBIF Florida

Bright Community Trust

CDC of Tampa


Clearwater Neighborhood Housing Services Incorporated

Community Fund of North Miami-Dade

Community Reinvestment Alliance of South Florida

Consolidated Credit Solutions, Inc.

Debt Management Credit Counseling

FL Alliance of Community Development Corporations

Florida Housing Coalition

Fusilier Realty Group

Future Leaders Community Development Corporation

Global Acquisitions & Investments 

H.O.M.E.S., Inc.

Haitian American Community Development Corporation 

Home Ownership Resource Center of Lee County, Inc.

Housing and Education Alliance

Lee County Housing Development Corp.

Metro North Community Development Corp.

Mezrah Consulting

Miami Beach CDC

Neighborhood Housing Services of South Florida

Neighborhood Renaissance, Inc.

New Urban Development

Real Estate Education And Community Housing Inc.

REVA Development Corporation

Social Venture Partners – Miami

Solita’s House Inc.

South Florida CLT

St. Petersburg Neighborhood Housing Services, Inc. (dba Neighborhood Home Solutions)

Struggle for Miami’s Affordable and Sustainable Housing, Inc.

Trinity Empowerment Consortium

Urban Philanthropies

We Help Communties “2” Develop Corporation

Wealth Watchers Inc.


CCCS of the Savannah Area, Inc. 

Community Outreach Training Center, Inc.

D&E, The Power Group

Georgia Advancing Communities Together, Inc.

H.O.P.E. Through Divine Intervention

Housing Justice League

JCVision and Associates, Inc.

National Housing Counseling Agency

Southwest Georgia United Empowerment Zone, Inc.


Council for Native Hawaiian Advancement

Hawai’i Alliance for Community-Based Economic Development

Hawaiian Community Assets


Chicago Community Loan Fund

Chicago Urban League

Economic Growth Corp.

Global Network

Heartland Alliance for Human Needs and Human Rights

Housing Action Illinois


Institute of Cultural Affairs [ICA]-USA

NHS of Chicago

Northwest Side Housing Center 

Oak Park Regional Housing Center

Open Communities

Partners in Community Building, Inc.

Spanish Coalition for Housing

Universal Housing Solutions CDC

Woodstock Institute


Community Investment Fund of Indiana

Fay Biccard Glick Neighborhood Center at Crooked Creek

Gary Economic Development Corporation

Homestead Consulting Services

HOPE of Evansville, Inc.

Irvington Development Organization

John Boner Neighborhood Centers

LaCasa, Inc.

Mapleton Fall Creek Development Corporation

Martin University

Martindale Brightwood Community Development Corporation

Memorial CDC

Northwest Indiana Reinvestment Alliance

NSP Consultants, LLC

Pathfinder Services, Inc.

Prosperity Indiana

Westside Community Development Corporation


River Cities Development Services

Scott County Housing Council


Louisville Affordable Housing Trust

Louisville Urban League


Urban Coalition of Appraisal Professionals


Foundation for Louisiana

Greater New Orleans Housing Alliance


Kingsley House Inc.

LiftFund Inc.

Multi-Cultural Development Center 

Neighborhood Development Foundation

New Day Homeowner Services

People’s Organization of Social Equality

Treme Market Branch

UMOJA Institute of African American Culture Trade and Economic Development Inc.



Common Capital

Community Service Network Inc.

Dorchester Bay Economic Development Corporation

Fair Housing Center of Greater Boston

Fenway Community Development Corporation

Lawrence CommunityWorks, Inc.

Local Enterprise Assistance Fund (LEAF)

Mass. Association of Community Development Corp. (MACDC)

Massachusetts Communities Action Network

Massachusetts Affordable Housing Alliance

NeighborWorks Southern Mass

Oak Hill CDC

Revitalize Community Development Corporation

Urban Edge


727 Mgt. LLC

Baltimore Community Lending, Inc.

Baltimore Neighborhoods, Inc.

CityLabs USA

Coppin Heights CDC

Greater Baltimore Community Housing Resource Board

Heritage United Church of Christ

Housing Options & Planning Enterprises, Inc. 

Maryland Consumer Rights Coalition

Neighborhood Housing Services of Baltimore

People for Change Coalition

Southeast Community Development Corporation

The Historic Marble Hill Community Association


Coastal Enterprises, Inc.

Genesis Community Loan Fund

Quattrucci & Company


Bridging Communities, INC.

Building Families First Community Organization

Building Movement Project/Detroit People’s Platform


Community Economic Development Association of Michigan

Cooperative Capital

Detroit Homeownership Center CDC

Detroit Non-Profit Housing

Fair Housing Center of Metropolitan Detroit

Financial Justice Coalition


Housing Resources, Inc.

Metro Community Development, Inc.

Michigan Community Action

Michigan Community Reinvestment Coalition 

Mid Michigan Community Action Agency

Neighborhood Legal Services Michigan

Neighborhood Service Organization (NSO)

New Development Corporation

New Hope Community Development

Southwest Economic Solutions



Asian Economic Development Association

Community Reinvestment Fund, USA

Dayton’s Bluff Neighborhood Housing Services

Jewish Community Action

Metropolitan Consortium of Community Developers

Mid-Minnesota Legal Aid

Voices for Racial Justice


Breakthrough Community Services, Inc.

CFORM-Covenant Community Development Corporation

Golden Triangle Housing Services

Housing Education and Economic Development

Mississippi Housing Partnership




Community Property Ventures


Consumers Council of Missouri

Forward Through Ferguson

International Institute Community Development Corporation

Justine Petersen

Metropolitan St. Louis Equal Housing and Opportunity Council

NHS of Kansas City, Inc.

Old North St. Louis Restoration Group

R.A.A.- Ready, Aim, Advocate


Useful Community Development

Washington University School of Social Work


Family Housing Advisory Services

Neighborworks Lincoln


New Hampshire

New Hampshire Community Loan Fund


New Jersey

Fair Housing Council

Jersey Counseling & Housing Development, Inc.

National Housing Institute

New Jersey Association on Correction

New Jersey Citizen Action

New Jersey Community Capital


Urban League of Essex County


New Mexico

Southwest Neighborhood Housing Services

United South Broadway Corporation

New York

Affordable Housing Partnership Homeownership Center

Albany Community Land Trust

Arbor Housing and Development

Association for Neighborhood and Housing Development (ANHD)

Beaulac Associates LLC

Bridge Street Development Corporation

Buffalo Niagara Community Reinvestment Coalition

Center for NYC Neighborhoods

Central lslip Civic Council

CNY Fair Housing, Inc.

Community Capital New York

Community Development Alliance of the Capital District

Community Loan Fund of the Capital Region, Inc.

Devotion NYC

Empire Justice Center

Fair Finance Watch


Human Development Services of Westchester

La Fuerza Unida, Inc.

Long Island Housing Services, Inc

New Economy Project

New York State Senator James Sanders

New York State Wide Senior Action Council

NHP Foundation

PathStone Enterprise Center

Rockland Housing Action Coalition

Rural housing Opportunities Corp.

St. Nicks Alliance

TSC Grand, Ltd.

United Tenants of Albany, Inc.

University Neighborhood Housing Program

White Wing Education Community


Nevada Legal Services

North Carolina

Action NC

Centre for Homeownership & Economic Development Corporation

Circle of Mercy

Community Link


Durham Regional Financial Center


Henderson & Company

NC Housing Coalition

New Frontier CDC

North Carolina Housing Coalition

Rebuild Durham Inc.

S J Adams Consulting

The Institute of Minority Economic Development

White Oak Foundation Inc.



Advocates for Basic Legal Equality

Akron Baptist Church

Another Chance Ohio

Antioch Baptist Church

Baptist Ministers Conference of Cincinnati

Breaking Chains Inc.

Buckeye Shaker Square Development Corp.

Burten, Bell, Carr Development, Inc.

Catholic Commission of Summit County

Central Ohio Fair Housing Association, Inc.

Charisma Community Connection

Cincinnati Change Inc

Cincinnati Community Action Agency

City of Bedford Heights

City of Cleveland Heights, Ohio

City of Cleveland- Dept. of Community Development

City of Dayton Human Relations Council

City of South Euclid

CityWide Development Corporation

Cleveland Neighborhood Progress

Collective Empowerment Group

Communities United for Action

Community Action Agency of Cincinnati-Hamilton County

Community Development Corporations Association of Greater Cincinnati

Community Development for All People

Community Housing Solutions

Community Matters

County Corp

Detroit Shoreway Community Development Org.


Economic and Community Development Institute

Education Motivation Success, Inc.

Empowering and Strengthening Ohio’s People (ESOP)

Fair Housing Center

Fair Housing Contact Service

Fair Housing Resource Center, Inc.

Faith Community Alliance of Greater Cincinnati

Famicos Foundation

Federation of Network Ministries

Friends of the African Union Chamber of Commerce

Greater Cincinnati Microenterprise Initiative (GCMI)

Greater Cleveland Reinvestment Coalition

Greater Dayton Minority Business Assistance Center

Habitat for Humanity of Greater Dayton

Hamilton County Community Reinvestment Group

Harrison Township

Heart to Heart Family Support Center

Helping Hands Community Outreach

Home Repair Resource Center

Homes on the Hill, CDC

Isonomy Consulting

Jerry Sykes, Toledo City Councilman



L.A. Keyz Financial Services

Madisonville Community Urban Redevelopment Corporation

Metro West Community Development Organization

Miami Valley Fair Housing Center, Inc.

Miami Valley Urban League

Mustard Seed Development Center

Nazareth Housing Dev. Corp.

Neighborhood Housing Services of Greater Cleveland

NeigborWorks Collaborative of Ohio

Ohio CDC Association

Ohio Fair Lending

Omega Community Corporation

One South Euclid

Peter Ujvagi, Toledo City Council Member

Rebuilding Together Dayton

Slavic Village Development

Small Business Development Center at TEC

The Fair Housing Center

The Pride Through Empowerment Foundation, Inc.

Tri-County Independent Living Center

Village Capital Corporation

Working in Neighborhoods

YWCA Dayton


Mvskoke Loan Fund



CASA of Oregon

Community Development Corporation of Oregon

Community Housing Fund

Grounded Solutions Network

Kate Allen Community Development Services


Radio Consulting Group, LLC

REACH Community Development


Allentown Housing Authority



Center for Family Services, Inc.


Community Action Committee of the Lehigh Valley, Inc.

Community First Fund

Community Neighbors United

Fair Housing Rights Center in  Southeastern Pennsylvania

Five/Four Advisors

Hilltop Alliance

Lancaster Equity CDC

Neighborhood Housing Services of Greater Berks, Inc.    

Oakland Planning and Development Corporation

Philadelphia Association of Community Development

Philadelphia Chinatown Development Corporation

Pittsburgh Community Reinvestment Group

Southwest Community Development Corporation

United Communities Southeast Philadelphia

Uptown Partners of Pittsburgh

Rhode Island

Capital Good Fund

Church Community Housing Corporation

Housing Network of Rhode Island

HousingWorks at RWU

NeighborWorks Blackstone River Valley


South Carolina

Greenville County Redevelopment Authority


South Dakota

GROW South Dakota


BLDG Memphis

Chattanooga Organized for Action

Good Neighbor Foundation-HomeOwnership Center

Latino Memphis

Lincoln Park Neighborhood Association

Memphis Urban League

New Level Community Development Corp

Tennessee Fair Housing Council

The Fifteenth Avenue Baptist CDC

You Can Make It HomeOwnership Center


BCL of Texas

Covenant Community Capital

Haelingen CDC

Home Sweet Home Community Redevelopment

Housing Channel

Humanitas Community Development Corporation

Jefferson Community Housing Development Foundation, Inc.

Our Casas Resident Council INC.

Pine Place Development, LLC

Southeast Houston CDC

Texas Appleseed


Jon M. Huntsman School of Business at Utah State University

Neighborhood Nonprofit Housing Corporation


Fair Housing Project, CVOEO

Housing Vermont


Community Business Partnership

Emerging Financial Concepts

Housing Opportunities Made Equal of Virginia


Southside Community Development and Housing Corporation


Beacon Development Group

Greenfield Institute

Northwest Fair Housing Alliance

Office of Rural & Farmworker Housing (ORFH)


Citizen Action of Wisconsin

Disability Justice

Forward Community Investments

Havenwoods Economic Development Corp

Inner City Redevelopment Corp.

Metropolitan Milwaukee Fair Housing Council

Milwaukee Christian Center

Movin’ Out, Inc

NeighborWorks Green Bay

Nothing Less, Inc.

Riverworks Development Corporation

Urban Economic Development Association of Wisconsin (UEDA)

Wisconsin Partnership for Housing Development

Wisconsin Voices / African American Roundtable

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