The Consumer Bankers Association (CBA) supports the Office of the Comptroller of Currency’s (OCC) proposed rules on ways to modernize the Community Reinvestment Act (CRA).
The CRA was initially enacted to address the lack of credit and financial services in low and moderate-income communities. The OCC recently put out a notice seeking feedback on its plan to modernize it.
“We support the goals of CRA and believe banks have an affirmative obligation to help meet the credit needs of their communities, including low- and moderate-income areas, consistent with safe and sound banking. The modernization principles outlined in our comment letter will make the Community Reinvestment Act more effective and more efficient for the communities our banks serve,” CBA President and CEO Richard Hunt said in a comment letter to the OCC. “Banks currently invest more than $100 billion each year into communities through CRA projects. Modernizing CRA will ensure these investments help those most in need and maintain CRA’s value in the future.”
The letter was drafted in conjunction with the more than 50-member banks on CBA’s Community Reinvestment Committee. These banks represent regional and national banks in all 50 states.
Among the key goals of the proposed CRA rulemaking is to provide clarity and certainty in CRA-eligible activities. CBA says there is currently too much ambiguity in CRA compliance and an abundance of compliance requirements. CBA believes too much unnecessary documentation is often needed, overly complicating and limiting the ability to reach lower income and underserve populations.
Further, CBA says Modernization efforts should take into account the transformation in both technology and customer preference.
“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,” Hunt wrote in the letter.
CBA added that CRA modernization should avoid one-size-fits-all framework as the rules should take into consideration different banks’ unique business strategies.
“CRA is more than 40 years old and the framework of the current regulations is over two decades old,” CBA Executive Vice President and General Counsel Steven Zeisel said. “We do not want to see CRA lose its overall effectiveness. Indeed, the purpose of reforms should be to enhance the effectiveness of CRA and ensure its continued value to the communities’ banks serve, including low and moderate-income areas.”