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ANHD testifies for stronger CRA
Every ten years, under the “EGRPRA” process, top federal bank regulators at the OCC, FDIC, and Federal Reserve Board review the full range of regulations banks must follow. They seek to “identify outdated, unnecessary, or unduly burdensome regulations” so as to reduce burden while still protecting consumers and the financial system.
ANHD Testifies for a Stronger Community Reinvestment Act
Every ten years, under the “EGRPRA” process, top federal bank regulators at the OCC, FDIC, and Federal Reserve Board review the full range of regulations banks must follow. They seek to “identify outdated, unnecessary, or unduly burdensome regulations” so as to reduce burden while still protecting consumers and the financial system. This Monday, federal bank regulators invited ANHD to present our analysis on the community panel at the EGRPRA outreach meeting at the Federal Reserve Bank of Boston. FDIC Chairmen Martin Gruenberg and the Comptroller of the Currency Thomas Curry attended with many other top-level officials at all three agencies.
This regulatory review is required under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). It covers the range of regulations prescribed for banks, including those pertaining to the Community Reinvestment Act as well as preemption, mergers & acquisitions, fair housing laws, and consumer protections. The process began last fall and will continue throughout the year. The agencies have been accepting written comments and holding outreach sessions in partnership with local Federal Reserve Banks and state regulators.
Through this and the previous two outreach sessions (Los Angeles and Dallas), the community development sector is sending a strong message that CRA and consumer protection laws matter and must be strengthened and enforced. While some opportunities indeed exist to streamline regulations and reduce burdens on banks, they should never be done in any way that weakens the CRA or consumer protections. In all cities, speakers recommended regulatory changes as well as better enforcement and clarification of existing regulations to ensure equitable access to banking and loans for lower-income people; provide incentives for greater community development activities that truly benefit lower-income people and communities; and hold banks accountable.
ANHD focused primarily on the many benefits the CRA has brought to NYC as well as ways the CRA could be enhanced, enforced, and strengthened to ensure that banks better serve New Yorkers. We discussed how CRA could better serve lower-income communities, immigrants and people of color by keeping a strong emphasis on bank branches; evaluating how effectively banking and lending products are offered and used; and assessing the quality and impact of all CRA activities to promote equitable economic development, affordable housing, and community development. Bank structures and banking have changed greatly since the CRA passed; banks often make loans and take deposits outside of traditional branch networks and also through affiliates and non-HMDA mechanisms like CEMAs. The CRA needs to be modernized to evaluate banks on where they make loans and take deposits. Banks should be required to report CEMAs and affiliate lending, and given one evaluation at the holding company level.
There is much more regulators can do to solicit community input on CRA exams and increase access to CRA community development data at the local level. Also, it is absurd that 98% of banks “pass” CRA exams with a Satisfactory or Outstanding. A more nuanced rating system is needed; at the very least, there should be a final rating of “Low Satisfactory” and “High Satisfactory”. And an “Outstanding” should be much harder to achieve, demonstrating true leadership, well above those of their peers.
ANHD has a deep appreciation of the CRA – of its benefits and potential. We appreciate this opportunity to present our analysis and recommendations and look forward to working with regulators and allies to strengthen and enhance the CRA and move it into the 21st Century.
CLICK HERE to download a transcript of ANHD comments at hearing
CLICK HERE for transcripts and videos of all hearings
Comments on regulations related to CRA are due May 14th. ANHD will be submitting expanded comments.
Contact Jaime Weisberg if you’d like help submitting comments of your own