Last month the interagency rule to modernize the Community Reinvestment Act (CRA) was released. This proposal represents the most significant change to CRA regulation in 27 years.
The agencies proposed important improvements in the CRA regulations including expansion of geographical areas on CRA exams, more data to scrutinize bank performance, and increased rigor on parts of CRA exams. But there are also areas where the proposal does not go far enough: not incorporating race into exams and lacking in transparent data on all banks. For a deep dive on the proposed rule, check out this report.
CRA has the potential to improve the health outcomes of low- and moderate-income (LMI) communities. There are many examples of banks making investments in healthcare nonprofits, clinics, and hospital systems. Banks also make significant investments in affordable housing, food access, and other social determinants of health. The recent proposal helps to codify that banks can and should receive CRA credit for their investments in health, and will hopefully result in additional investment in this activity.
The expanded definition of “community development” now incorporates investments in hospital systems/healthcare services. The agencies now name health services explicitly in two of the definitional categories; such projects will count under both the community supportive services and essential community facilities evaluation fields. The Notice of Proposed Rulemaking (NPR) also removes the stipulation that community facilities must also attract or retain businesses and residents. This is a laudable goal but was applied inconsistently in CRA exams, making it more difficult to qualify the activities for CRA consideration. The proposed changes will enable more banks to feel secure that their investments in healthcare will earn them CRA credit. This can lead to increased investment and have direct positive impacts on the health and wellbeing of residents in LMI communities.
Data collection is also important to understanding the health outcomes of CRA investments. There were some advances in this area. For example, the proposal would require data collection for all large banks regarding the dollar amount of community development activity, the category of the activity and the location of the activity. But the agencies did not go far enough to improve data collection for the “impact review” section of the community development finance test. Data on impacts such as the number of beds in health facilities or how many housing units had lead paint abatement will better capture the importance of funding health initiatives and better motivate banks to invest in these initiatives since their outcomes will be more accurately reflected on CRA exams.
During the advanced notice of proposed rulemaking last year, NCRC urged hospitals, healthcare systems, nonprofits, and medical providers to weigh in via comment letter. Of the 615 total comments submitted, 65 comments, or 10.6%, were related to the social determinants of health and ultimate health outcomes for LMI communities. Those comments were used by the agencies to draft the proposed rule. In order to make sure these proposals are incorporated and strengthened we urge folks to submit comments again; Guidance on how to do so can be found at NCRC.org/TreasureCRA.
Comment letters regarding the CRA proposed rulemaking are due August 5, and NCRC has created a health-focused sample letter that you are welcome to use as a guide. We hope you will consider submitting so we can ensure that banks continue, and expand, their investment in healthy communities.
Amy Lieber is an intern with Special Initiatives.