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Modernizing the Community Reinvestment Act

The Chairman of the House Financial Services Committee, Maxine Watters, has authored a public letter with the backing of 76 of her Democratic colleagues in the House of Representatives, the Board of Governors of the Federal Reserve, the FDIC, and the Office of the Comptroller of Currency (OCC). 

The letter urges federal regulators to “consider carefully” the comments they receive from civil rights and community groups as well as well as other community stakeholders to modernize the Community Reinvestment Act (CRA) and enact new rules to prevent modern-day redlining. 

According to the Office of the Comptroller of Currency, the CRA was first enacted in 1977 and encourages certain insured depository institutions to help meet the credit needs of the communities in which they are chartered, including low- to moderate-income (LMI) neighborhoods, consistent with the safe and sound operation of such institutions. 

“We are heartened by your agencies’ efforts to put forward a new proposal to modernize the CRA, which represents a once in a generation opportunity for federal bank regulators to end redlining and its present-day manifestations. The CRA became law in 1977 and the last time your agencies came together to reform CRA rules was in 1995, nearly three decades ago. Significant changes in the financial marketplace have taken place since that time…[m]any of those changes have contributed to less effective CRA rules,” wrote the lawmakers. “We appreciate your agencies’ joint efforts to work together to advance a much-needed update to CRA rules. As you work to finalize the rule, we urge you to consider our recommendations as well as those from civil rights groups, consumer advocates, and other affected stakeholders.” 

The CRA requires federal banking agencies to assess the institution's record of meeting the credit needs of its entire community, including LMI neighborhoods, consistent with the safe and sound operation of such institution, and take such record into account in its evaluation of an application for a deposit facility by such institution. 

This letter comes after the Federal Reserve Board and the FDIC released a notice of proposed rulemaking (NPR) on May 5 to strengthen and modernize the CRA regulations to better achieve the purpose of the CRA. The OCC encourages stakeholders to review the proposed rule and provide comments on or before the close of the comment period on August 5, 2022. 

Click here to submit your comment with the OCC. 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected]
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