CHAPA Submits Letter on Community Reinvestment Act

CHAPA submitted a letter to the Comptroller of the Currency on November 19th in response to the office’s Advanced Notice of Proposed Rulemaking (ANPR) for the Community Reinvestment Act (CRA). This is a first step in a what is likely at least a year long process for CRA reform.

The CRA was enacted in 1977 as response to “redlining,” a discriminatory practice in which banks would deny loans to residents living in certain neighborhoods, often those with large minority populations. The CRA requires banks to lend money in the communities where they are chartered to do business or receive deposits. Banks can also receive credit for investing in certain affordable housing and community development programs, including in the Low-Income Housing Tax Credit, the New Markets Tax Credit, and the Historic Rehabilitation Tax Credit.

The ANPR asked for comments on:

1. Increasing lending and services to low and moderate income communities;
2. Making CRA evaluation more transparent;
3. Clarifying and expanding the types of CRA-eligible activities;
4. Defining assessment areas;
5. Improving the timeliness of CRA regulations;
6. Reducing the regulatory burden of CRA performance evaluations.

The last significant reform of the CRA regulations was in 1995, before Internet baking and interstate banking became widespread ways of doing business. This was also before the passage of major financial regulation legislation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act.

While the OCC has initiated the regulatory review process, it is important to note that the CRA is regulated by two other entities, the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC). The three regulators typically coordinate regulatory reform efforts.