ValueWalk, September 17, 2019 : Groups send Community Reinvestment Act reform letter to regulators
520 state and national community-based groups called on the three federal bank regulatory agencies that implement the Community Reinvestment Act (CRA) to not include a one-ratio metric in the upcoming proposed CRA rule change.
In a letter written and submitted by the National Community Reinvestment Coalition (NCRC), the coalition of housing, consumer protection and community development organizations urged the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to drop the idea of a “one-ratio” metric from new CRA rules expected to be proposed by the agencies this fall.
“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 Community Reinvestment Act rating either at the assessment area or overall, it will likely distort CRA activity in a way that is not responsive to local needs,” the letter said. “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).”
“A one ratio approach will make Community Reinvestment Act exams less transparent and will deter public input. If the one ratio replaces existing metrics such as percent of loans to low- and moderate-income 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.”
