Banking and Finance Law Daily Wrap Up, COMMUNITY DEVELOPMENT—NCRC offers suggestions for CRA reform, (Mar 14, 2022)

By Charles A. Menke, J.D.

The report offered suggestions for reforming the CRA that the organization believes would result in underserved communities benefiting from significantly more reinvestment.

On the cusp of anticipated changes to the Community Reinvestment Act, the National Community Reinvestment Coalition (NCRC) has urged the federal banking agencies to implement reforms that meet the challenges of the 21st century. In an article by NCRC Senior Policy Advisor Josh Silver, the NCRC stated that the banking regulators must update their CRA rules to reflect new technological developments and to more explicitly address racial inequalities, while also preserving the CRA’s beneficial features that have boosted lending and reinvestment activity to low- and moderate-income (LMI) census tracts and borrowers.

The article referenced Acting Comptroller of the Currency Michael Hsu’s recent remarks addressing the OCC’s plans to implement CRA policymaking with other federal banking agencies (see Banking and Finance Law Daily, Feb. 15, 2022). According to the article, while Hsu spoke at length regarding the need for considering race in the CRA rules, he did not expand on any specifics of the rules.

Reiterating the organization’s priorities for CRA reform, the article urged regulators to:

• add consideration of race to CRA exams;

• decrease CRA grade inflation and increase the accuracy of ratings;

• ensure that assessment areas cover the great majority of a bank’s loans or deposits and include a diversity of areas;

• enhance CRA enforcement through more rigorous merger reviews;

• improve data to rate banks rigorously and to identify community needs; and

• support climate remediation efforts.

The article also suggested that regulators replace CRA data on business lending with Dodd-Frank Act Section 1071 data on race, gender and small businesses. Last September, the Consumer Financial Protection Bureau issued a proposed rule requesting information on small business lending data, which is intended to increase transparency and access to credit for small businesses (see Banking and Finance Law Daily, Sept. 1, 2021).

Companies: National Community Reinvestment Coalition

RegulatoryActivity: CFPB CommunityDevelopment DoddFrankAct EqualCreditOpportunity FinancialStability FinTech Loans Mortgages