Democratic members of the U.S. House Financial Services Committee, led by ranking member Rep. Maxine Waters (D-CA), are urging the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) to extend the public comment period on proposed changes to the Community Reinvestment Act (CRA).
The CRA requires banks to help meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods.
In a letter to FDIC Chairman Travis Hill and OCC head Jonathan Gould, the lawmakers said the more than 400-page proposal could significantly change how banks are held accountable. Specifically, the proposal would narrow how regulators evaluate banks’ lending and services, make it easier for banks to receive an “outstanding” rating, and reduce the number of banks evaluated for their community development activities.
“Taken together, the proposed revisions likely will significantly impact which institutions are encouraged to meet the credit needs of their communities through activities that extend beyond lending such as community development activities,” the lawmakers wrote in the letter.
The Democratic lawmakers added that the consequences could extend beyond how banks are graded. They cautioned that the proposal could undermine the housing reforms Congress recently enacted through the 21st Century ROAD to Housing Act by weakening incentives for investments that support affordable housing and community development.
In addition, they expressed concerns about how the regulators advanced the proposal. The FDIC Board adopted the changes behind closed doors through a notational vote rather than at a public meeting where regulators debate and discuss the proposal. The Democrats said a rule of this scale demands greater transparency and meaningful public input, not a rushed process.
Their apprehensions are shared as more than 375 financial institutions, religious groups, small businesses, local governments, and community organizations have raised “serious concerns” about the proposal and said they need more time to fully assess its impact.
The Democrats want to ensure that the CRA remains a tool for expanding access to credit and investment in communities that have often been shut out. A proposal that could reshape those protections and affect affordable housing and community investment across the country demands full public scrutiny.
“As we and other stakeholders analyze this new proposal, we request that the public comment period be extended to no less than 120 days to give members of the public more time for substantive review and comment on this sweeping proposal,” the lawmakers added in the letter.
Along with Waters, the letter was signed by Reps. Nydia Velázquez (D-NY); Brad Sherman (D-CA); Gregory Meeks (D-NY); Stephen Lynch (D-MA); Al Green (D-TX); Emanuel Cleaver (D-MO); Jim Himes (D-CT); Bill Foster (D-IL); Joyce Beatty (D-OH); Juan Vargas (D-CA); Josh Gottheimer (D-NJ); Vicente Gonzalez (D-TX); Sean Casten (D-IL); Ayanna Pressley (D-MA); Rashida Tlaib (D-MI); Ritchie Torres (D-NY); Sylvia Garcia (D-TX); Nikema Williams (D-GA); Brittany Pettersen (D-CO); Cleo Fields (D-LA); Janelle Bynum (D-OR); Sam Liccardo (D-CA); and Everton Blair (D-GA).