CBA Comment Letter re Community Reinvestment Act Regulations ANPR

To Whom It May Concern:

The Consumer Bankers Association (CBA) is pleased to submit these comments to the Board of Governors of the Federal Reserve System (Federal Reserve) in response to the Advance Notice of Proposed Rulemaking, “Community Reinvestment Act Regulations” (ANPR).

CBA and our members support the goals of the Community Reinvestment Act (CRA) and believe banks have an affirmative obligation to help meet the credit needs of their communities, including low- and moderate-income (LMI) areas, consistent with safe and sound banking practices.  Through the CRA, banks across the nation invest hundreds of billions of dollars in their communities, demonstrably benefitting them. Our members remain committed to further supporting the communities we serve

CBA also recognizes it has been decades since the CRA was meaningfully reformed, and much has changed for banks and the communities we serve in that time. Banking has undergone a radical transformation to keep pace with consumer demands, and now banks need a CRA framework that responds to these changes. 

Part of banks’ commitment to communities includes serving them in their most dire times of need.  The unprecedented outbreak of COVID-19 has already greatly affected the communities we serve and will continue to impact communities for years to come.  As banks and the Federal Reserve work to respond to consumer needs during this crisis, we urge the Federal Reserve to take the time necessary to fully consider the impacts of this crisis, particularly to LMI communities, while moving forward with the rulemaking process.

CBA also recognizes the challenges currently facing our nation regarding racial equity and equality and realizes the vital part the CRA plays in access to financial services for minority individuals and communities. CBA urges the Federal Reserve to ensure modernization efforts adhere to the statutory purposes of the CRA by upholding the affirmative obligation to meet the credit needs of LMI areas and individuals.

CBA believes implementing changes to the CRA is a worthwhile yet monumental effort for all interested stakeholders. CBA applauds the Federal Reserve for striving to modernize the CRA and for approaching reforms with an eye towards greater consistency and transparency in the evaluation of CRA performance. The current regime is often applied with great subjectivity and inconsistency between examinations and examination teams.  CBA values efforts to address these issues to create a more efficient and objective process for all involved stakeholders

CBA urges the Federal Reserve to continue to consider the nuanced and complicated nature of CRA and its impacts on the banking industry by implementing changes that encourage flexibility for regulated institutions to best serve our communities. We believe preserving optionality in a framework grounded in quantitative evaluations can help increase transparency, objectivity, and clarity throughout the CRA process. CBA details efforts to improve these goals for CRA reform throughout our response.

  1. The Federal Banking Agencies Should Continue to Work Together on CRA

CBA applauds the Federal Reserve for taking steps towards reforming a decades-old CRA regime. The CRA is demonstrably vital to LMI communities across the country, yet has not been modernized, leaving a framework that often fails to consider the realities of banking today. It is clear throughout the ANPR that the Federal Reserve dedicated itself to reading and responding to stakeholder comments and joint-regulatory efforts present through the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation’s (FDIC) Notice of Proposed Rulemaking process and beyond. We appreciate efforts by the Federal Reserve to reflect and build on the important issues raised through previous modernization efforts.

CBA firmly believes the most comprehensive and thorough CRA framework is one facilitated by all prudential regulatory banking agencies. The Federal Reserve, OCC and FDIC have worked together in implementing the CRA since the initial rulemaking process in 1978. Recently, a fragmented approach has emerged. CBA advocates a united approach to CRA modernization is of vital importance to preserve and strengthen CRA policy for the foreseeable future and to continue the positive impact of CRA efforts for LMI communities and individuals. 

There are many reasons for maintaining consistent CRA standards among the federal banking agencies. The CRA places the same responsibility on each agency “to use its authority when examining financial institutions, to encourage [banks] to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.” Inconsistent CRA frameworks will undermine this uniform responsibility and would negatively impact CRA performance and the communities our members serve.