OCC to review Community Reinvestment Act; Changes could impact billions in loans and investments annually

WASHINGTON, D.C. – Today, The Office of the Comptroller of the Currency (OCC) released an Advanced Notice of Proposed Rulemaking to change how banks are tested for compliance with the Community Reinvestment Act (CRA). The 1977 law requires banks serve the needs of all communities in which they are chartered to do business. The OCC is one of three agencies that set CRA rules and test whether banks follow them.

Jesse Van Tol, CEO of the National Community Reinvestment Coalition, made the following statement.

“The OCC is undertaking a serious process that could reshape lending in low- and moderate-income communities for a generation. “Adjustments to CRA could help more Americans become home and business owners; or on the other hand, enable lenders to ignore entire neighborhoods.

“In the past two decades, banks have made nearly $2 trillion in small business and community development loans in working-class neighborhoods to meet the requirements of the law. But the law’s effectiveness is eroded each year there is not common sense reform. What’s at stake is nothing less than the health and vibrancy of American communities.

The Comptroller has said he wants to improve CRA, and if he does so in ways that increase lending and investments to low- and moderate-income communities, we will be the first to applaud it. But I have very serious concerns about the ideas contained in the ANPR.

As always, the devil is in the details. We will see what gets proposed in the form of a regulation. But sometimes, the devil is in the concept. The OCC is clearly contemplating several concepts that banks will love, but will result in less lending and investment in low- and moderate-income communities. If the OCC ultimately proposes one metric that is determinative of a bank’s CRA grade, then the end result will undoubtedly be less responsiveness to local community needs. Additionally, broadening what qualifies for CRA credit is an opening to count more of what banks already do, while decreasing their traditional CRA activities.”

“If anything, the law and the rules enforcing it need to be strengthened, not relaxed. Bank lending in working-class communities has declined dramatically since 2010, especially among the biggest banks. Meanwhile, 98 percent of banks still pass their CRA exams. NCRC and its hundreds of members will be submitting comments and urging community leaders to make it clear to the OCC that the Community Reinvestment Act should be modernized and strengthened, not weakened.”

“Banks and consumer groups agree that the law needs to be uniformly implemented. The rules need to be clear. That means all of the agencies that set rules for CRA enforcement, including the FDIC and the Federal Reserve, need to work together on a common framework. That framework should place at its core improving access to capital, credit and basic banking services for low- and moderate-income people, and in communities of color.

For more on CRA modernization, see: treasureCRA

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