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Alternate CRA Framework Would Boost Community Development Lending By $28 Billion
There’s been some back and forth on the Community Reinvestment Act. After the Office of the Comptroller of the Currency (OCC) finalized its overhaul, leaving banks regulated by the FDIC and Federal Reserve operating under different rules, Rep. Maxine Waters then introduced legislation to repeal the changes entirely. Now, the National Community Reinvestment Coalition has had enough. The organization released its own proposal, which it says would increase community development lending and investment by between $15 billion and $28 billion.
The Community Reinvestment Act requires banks “to meet the credit needs” of the communities in which they operate. Banks undergo periodic CRA examinations and receive a grade of “outstanding,” “high satisfactory,” “low satisfactory,” “needs to improve,” or “noncompliance.” NCRC proposes comparing banks to their peer groups, rather than against an arbitrary standard; the group also proposes adding a qualitative portion to the CRA exam, counting for about 20 percent of the total grade, which would ensure that community development lending by a bank was “responsive to a community’s needs.” Currently, all lending in low-income areas, whether it’s to build affordable housing or a sports stadium, “counts” for CRA credit.
