CBA Outlines Recommendations To Strengthen Joint CRA Modernization Proposal

The Consumer Bankers Association, in a comprehensive comment letter submitted today to the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) outlined recommendations to strengthen the Community Reinvestment Act (CRA). The letter follows a Notice of Proposed Rulemaking (NPR) issued in May by the agencies seeking to modernize to the law, which was first enacted in 1977 and has not been meaningfully updated in over two decades.

In a new statement released today, CBA President & CEO Lindsey Johnson said:

"CBA long has called on policymakers to modernize CRA to better reflect today's banking landscape and anticipate that of the future. We appreciate the opportunity to provide recommendations intended to promote, not curtail, CRA activity and strongly encourage regulators to reconsider their proposed framework to ensure banks are well-positioned to deliver on the statutory intent of this important law. To do so, it's imperative any final rule provides banks with adequate flexibility to address the unique needs of different markets as well as an implementation timeline of at least 24 months.

"America's leading banks annually invest more than $500 billion through CRA and remain fully committed to expanding access to credit among underserved communities. CBA, our Community Reinvestment Committee and CRA Working Group, and all of our member banks stand ready and willing to assist regulators in this effort, furthering our shared objective of financing the American Dream today - and for decades to come."

In the comment letter sent to the Federal Reserve, FDIC, and the OCC, CBA provided recommendations intended to "facilitate the implementation of a streamlined, modernized rule that reasonably accounts for the operational realities of the banking industry," including advocating for regulators to strongly consider:

1. Providing a longer implementation timeframe of at least 24 months to ensure banks can navigate the complex changes, come into compliance, and continue to successfully optimize support for the communities they serve.
2. Helping low- to moderate-income individuals build wealth by excluding auto loans and instead refocusing the CRA on mortgage loans and small business loans, which are instrumental to achieving that goal.
3. Ensuring continued flexibility for banks to determine how best to serve their communities and in ways consistent with their business orientations, recognizing banks require flexibility to address different needs and issues across different markets.
4. Expanding community development categories, rather than a restriction, which will complicate banks' efforts to meet the unique and varying needs of each community they serve.
5. Examining each bank on its facility-based assessment area and institution-wide performances, rather than using Retail Lending Assessment Areas, which will not accurately measure a bank's CRA activity and could adversely affect a bank's ability to support communities most in need.

The Bottom Line: These recommendations are intended to deliver a final CRA rule that provides banks more clarity as to which investments will count - allowing for them to do more, not less. They also will help ensure CRA investments reach those communities most in need and ensure banks are well positioned to build on their proud legacy of financing the American dream across every community thy serve.

To read the full letter, click HERE.

• Since, May, CBA's CRA Working Group, consisting of top CRA officers, attorneys, and policy personnel from our member banks, has worked diligently to analyze and provide comments to the nearly 700-page proposed rule. The group has met consistently on a weekly basis (and sometimes more) to ensure the industry has successfully highlighted opportunities and addressed concerns to strengthen the proposal.
• To read more about these recommendations and CBA's longstanding advocacy efforts to modernize the CRA, click HERE and HERE.

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