CRA Modernization

OCC CRA FINAL RULE

The Community Reinvestment Act was signed into law in 1977 to ensure banks continued serving the financial needs of their communities. The regulations have only been significantly amended once, in the mid-1990s, before smartphones and other modern banking advancements. CRA needs to be modernized to continue working as it was intended. Banks currently invest nearly $500 billion each year into low- and moderate-income neighborhoods through CRA and other projects. Modernizing the Community Reinvestment Act will ensure those investments reach more people and communities in need.

To successfully modernize CRA, we believe regulators should:

Provide clarity and certainty in CRA-eligible activities: There is currently too much ambiguity in CRA compliance and too much need to document detailed compliance requirements. Different examiners and different agencies interpret the same rules differently. Subjective terminology often requires examiners to make determinations on a case-by-case basis, so banks do not know what they have to do to comply. Too much unnecessary documentation is often needed, overly complicating and limiting the ability to reach lower income and underserve populations.
Account for digital transformation and customer preference: Modernization efforts should take into account the transformation in both technology and customer preference. It is important for both branch and nonbranch channels to be given equal weight, and that banks be able to demonstrate they are serving the needs of their entire communities, including low- and moderate-income customers, by employing channels that fit their model and their market.
Permit more flexibility to invest where there is need: Modernization should allow CRA-eligible activity wherever it is needed, including areas identified as underserved, while continuing to ensure banks are helping to meet local community needs.
Provide optionality for business models and strategies: While clarity is needed, CRA modernization should also avoid an overly strict one-size-fits-all framework. Rules should take into consideration different banks’ unique business strategies, just as they consider the unique needs of each community.

With the resources below, you can learn more about CRA and how it should be updated to reflect modern banking practices as well as consumer demands.

Click on the images below to hear directly from CRA practitioners about the benefits their bank's CRA projects have provided communities and how modernizing CRA would allow those projects to help more people. The views expressed in these videos are those of the individual speakers specifically focused on the role and importance of CRA.