U.S. Sen. Pat Toomey (R-PA), the ranking member of the U.S. Senate Banking Committee, reached out to federal banking regulators with concerns related to community benefits plans (CBPs) developed by banks and community groups in connection with the Community Reinvestment Act (CRA).
In a Sept. 7 letter sent to the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC), Toomey highlighted the need for greater transparency with CBPs.
“Greater transparency is critically necessary for Congress and the public to judge the efficacy of the CRA and its implementing regulations. The CRA was enacted to encourage covered banks to extend credit in their communities, particularly low- and moderate-income neighborhoods. One way banks have sought to mitigate regulators’ concerns over CRA compliance has been by entering into agreements with community groups on CBPs,” Toomey wrote to regulators.
Congress passed a bill in 1999 that requires banks and nongovernmental entities to fully disclose any agreements to the public. However, Toomey said banking regulators have since adopted regulations that allow banks and community groups to hide details of their CRA-related agreements.
“This circumvention of congressional intent is egregious in its own right, but the growth in prevalence and dollar value of CBPs in recent years only underscores the need to update the regulations implementing the GLBA’s CRA sunshine provision,” Toomey wrote, noting one recent agreement equaled $100 billion.
Toomey urged federal banking regulators to revise their regulations in order to provide meaningful transparency.
“As your agencies seek to finalize recently proposed updates to the regulations implementing the CRA — an explicit objective of which is to ‘promote transparency and public engagement’ — I urge you to establish a public, searchable database on the agencies’ websites containing all CRA-related agreements in full, including CBPs, and provide comprehensive data on such agreements. In addition, I urge you to broaden the definition of ‘covered agreement’ under the regulations to align with congressional intent and mitigate the potential for evasion by banks and community groups,” the senator added.