CRA reforms must go beyond branch banking


Richard Hunt
October 7, 2019

The Community Reinvestment Act is more than 40 years old and has only been significantly amended once, in the mid-1990s when cellphones still played the snake game and there was a Blockbuster video on every corner.

Technology has changed since then. Consumer needs have changed since then. Banking has changed since then. But the CRA has not and the 1977 law is no longer working. Modernization is needed for the law to continue working for communities across the country.

According to the Office of the Comptroller of the Currency, banks invested nearly $500 billion last year into low- and moderate-income (LMI) neighborhoods through the CRA. Modernizing CRA could not only increase that number but ensure the investments go where needed most, whether it is through homeownership, business loans, disaster relief or community services. These investments could be enhanced through CRA reforms reached in agreement by the respective regulatory agencies and key outside stakeholders — a process currently underway.

Recognizing the common interest in having CRA maintain its overall effectiveness, a modernized regulatory scheme must account for ever-changing customer preferences and digital advancements. The most visible investment in a community is the branch. And, while we recognize branches remain important, their role has significantly changed since CRA regulations were amended in 1995.

The current disproportionate emphasis on branch location in assessing banks’ CRA performance makes it particularly difficult for banks to demonstrate they are meeting community needs using non-branch channels. Allowing banks the flexibility to invest in CRA activities outside of their branch network will result in more dynamic and impactful CRA activity to the communities that need it most.

CRA also needs to be more transparent to allow banks to know which investments count before making the investment.

Uncertainty stymies CRA activity. Lists detailing the activities eligible for CRA credit will help banks make better investments in LMI communities while increasing their overall CRA activity. Once again, flexibility is key, and creating a dynamic list has the ability to reflect new and innovative opportunities will ensure CRA activity is able to keep pace with the rapid transformation of banking.


Much of the CRA modernization talk has centered around metrics for examiners to more objectively determine a bank’s overall CRA activity. A more objective approach could help curb inconsistency between examinations and different examiners. Additionally, more objective measures which take into account a bank’s total CRA activity relative to the bank’s model, products, services and markets will create more measurable goals for banks. It would also provide more consistent CRA activity.

OCC-chartered financial institutions account for more than two-thirds of the CRA investments made nationally, so it is only natural for them to take the lead. When the Federal Deposit Insurance Corp. is included, the banks supervised by these agencies account for roughly 80% to 90% of all CRA dollars.

Recent reports indicate these agencies are prepared to act in order to help communities, but it is less clear whether the Federal Reserve will be part of this effort. Ensuring a unified front from the OCC, FDIC and Fed would prevent competing CRA regimes, which reduces clarity, transparency and ultimately, the effectiveness of CRA investments.

The Consumer Bankers Association appreciates the OCC leading the way and working with stakeholders. We hope the other regulators will join it in this generational opportunity.