ADVOCATES CRITICIZE PROPOSED CRA CHANGES AS wORSENING LENDING DISCRIMINATION
The organizations hold that the proposed notice of proposed rulemaking (NPRM) for changes to the Community Reinvestment Act (CRA) by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) will make lending discrimination worse. In the statement by Jesse Van Tol, CEO of NCRC, he says:
“The ratio would measure the overall value of a bank’s CRA activities against the value of its deposits. This will encourage banks to seek the largest CRA financing deals, regardless of whether the deals make the most sense for local community needs. That’s why many banks as well as community-based organizations oppose the ratio being the primary determining factor on CRA exams. While the proposal looks at assessment area performance, it sets up a scenario where a bank could run up the dollar volume in 50% of its assessment areas, and still pass. The FDIC seems to have gotten a carve-out for community banks. In other words, many FDIC-regulated banks will be able to opt out of the new evaluation system and keep their CRA exams the way they are now. This further confuses the regulatory landscape, the exact opposite outcome of what new rules were supposed to achieve.
“The ratio would measure the overall value of a bank’s CRA activities against the value of its deposits. This will encourage banks to seek the largest CRA financing deals, regardless of whether the deals make the most sense for local community needs. That’s why many banks as well as community-based organizations oppose the ratio being the primary determining factor on CRA exams. While the proposal looks at assessment area performance, it sets up a scenario where a bank could run up the dollar volume in 50% of its assessment areas, and still pass. The FDIC seems to have gotten a carve-out for community banks. In other words, many FDIC-regulated banks will be able to opt out of the new evaluation system and keep their CRA exams the way they are now. This further confuses the regulatory landscape, the exact opposite outcome of what new rules were supposed to achieve.
“Discrimination in lending is still widespread and devastating for families and their communities. And yet 98% of banks pass their CRA exams. Taking steps to weaken the rules makes no sense. New rules should add clarity to the compliance process for banks, as well as reflect changes in how people interact with banks and how banks do business. But most critically, new rules should help low- and moderate-income borrowers in the communities that are most in need of CRA-based lending.”
