CBA Comments on House Community Reinvestment Act Hearing

Nick Simpson

 

CBA Comments on House Community Reinvestment Act Hearing

“We believe the purpose of any reforms to CRA should be to enhance its effectiveness, and ensure its continued value to all communities banks serve, including low- and moderate-income areas”

 

WASHINGTON, D.C. – The Consumer Bankers Association today wrote House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and Ranking Member Patrick McHenry (R-N.C.) to comment on ways to modernize and express support for the Community Reinvestment Act.

 

“An update to CRA regulations and supervisory process would modernize the process and improve outcomes for the communities they serve,” CBA President and CEO Richard Hunt wrote. “CBA does not advocate, and would not support, changes to CRA that would undermine its value. We believe the purpose of any reforms to CRA should be to enhance its effectiveness, and ensure its continued value to all communities banks serve, including low- and moderate-income areas. However, the current regulatory framework of CRA is over two decades old and in need of reforms to reflect the enormous changes to banking that have taken place in that time.”

 

A copy of the letter is available here.

 

CBA launched a CRA microsite last fall containing comment letters, videos, op-eds, statements and relevant articles. The site is available here or by visiting consumerbankers.com/CRA. A video from CRA practitioners is also on the site.

 

In a November 2018 comment letter to the Office of the Comptroller of Currency’s advance notice of proposed rulemaking, CBA outlined key goals of CRA modernization. Those goals are outlined and discussed in more detail below:

 

  • 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. CBA wrote, “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.

 

These changes should also reduce costly and time-consuming technical requirements; expand the value of CRA by ensuring the most appropriate CRA-eligible activities receive consideration; and provide for more timely evaluations.

 

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About the Consumer Bankers Association:

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.