Valley National Bank Held Accountable

The Community Reinvestment Act (CRA) requires banks to lend and provide services equitably to low- and moderate-income people and neighborhoods, and to invest in community development efforts to strengthen these communities.  Regulators have a responsibility to accurately assess this record through regular CRA exams and to take it into account when banks apply to merge with another bank or open/close branches. ANHD was part of a coalition of community groups nationwide that raised strong objections to the proposed merger because we felt that Valley National Bank has not met its obligations and its regulators were not sufficiently holding them accountable.  As outlined in ANHD's July 17 blog, we were concerned by the bank's poor record cited directly in the bank's most recent CRA exam, as well as trends made apparent through public data and ANHD's yearly survey of bank reinvestment in NYC. While we are disappointed that the bank was not required to consult community groups before the CRA plan was approved - and we have yet to see the full plan, the OCC's conditional approval letter provides some insight into what it includes: Development of a first time home buyer program, with $30 million allocated to support this. This product will include lower down payments, less restrictive credit underwriting requirements, and required homebuyer education and counseling. They will work with HUD to identify approved counselors for this homebuyer program. They also said they plan to purchase "CRA loans", but originating loans demonstrates a much stronger commitment to the spirit of the CRA and we urge them to explore further ways to increase their lending directly to LMI borrowers.

• An increase in their grant budget ($50,000 in 2013, $100,000 this year, and $250,000 in 2015).
• In 2014 they established a small business lending unit to concentrate on automated and efficient delivery of credit lines and loans up to $100,000.
• Commitment to hiring a dedicated team to develop commercial loans in the Bronx. They already hired two additional lending officers pursuant to this.

The CRA plan promises enhancements in home mortgage lending to LMI geographies, small business lending to LMI borrowers and in LMI geographies, multifamily housing lending, and community development investment needs. They promise to regularly report on progress to the OCC, and make public a CRA Plan Summary report demonstrating measurable results. They must comply with the terms of this plan, which will also be factored into their next CRA exam by the OCC. While some aspects of the plan are not as far-reaching as a bank this size could and should be doing, it is a good step forward on the part of the bank and the OCC.  We applaud the OCC for taking our comments into account and the bank for making a good faith effort to improve their CRA record.  Already, ANHD has noted some improvements in Valley National's performance since the exam period.  We look forward to meeting with Valley National's leadership and continuing to engage with them throughout the next few years as the plan is put into practice. Bloggers:  Jaime Weisberg