Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, April 04, 2018

Treasury releases Community Reinvestment Act modernization recommendations

By Nicole D. Prysby, J.D.

The Department of the Treasury has announced the release of a report with recommendations to modernize the Community Reinvestment Act. The recommendations were issued to the Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation. The report explains that the regulatory and performance expectations under the CRA have not kept pace with the organizational and technological changes in the banking industry over the past four decades. Therefore, Treasury reviewed the CRA, with the focus on identifying modifications to align banks’ CRA activities with the needs of the communities they serve.

"Forty years since the passage of CRA, it is time for modernization to fit today’s banking landscape and community needs," said Treasury Secretary Steven T. Mnuchin. "Our recommendations will improve the effectiveness of CRA by enhancing the assessment and examination process, enhancing the ability of banks to deliver services in the communities they serve while considering technological advances in the financial industry."

The recommendations are based on meetings with close to 100 stakeholders representing community and consumer advocates, academics and think tanks, financial institutions, trade associations, and law firms, all three CRA regulators, and a review of a wide range of data, research, and published material from both public and private sector sources.

The recommendations are focused in four major areas:

  • updating the definitions of geographic assessment areas to reflect the changing nature of banking arising from changing technology, customer behavior, and other factors;
  • increasing clarity and flexibility of CRA examinations to increase transparency and effectiveness of CRA rating determinations;
  • improving the examination process to increase timeliness of evaluations and increasing accountability for banks’ planning of their CRA activity; and
  • incorporating performance incentives to better serve the CRA’s intended purpose of encouraging banks to meet the credit and deposit needs of their communities.

Trade associations approve. A number of groups have issued reactions to the report. The American Bankers Association noted with approval that Treasury recognized that the CRA needs to be updated to reflect mobile technology and other modern banking methods. The Consumer Bankers Association welcomed the recommendations, again focusing on the need for banks to have the flexibility to use mobile, online, and other digital technologies to serve communities. The Financial Services Roundtable also welcomed the report, stating that it includes common-sense recommendations that should allow financial institutions to more easily serve low to moderate income customers. The FSR also urged the OCC, FRB, and FDIC to pursue a unified interagency initiative to achieve the goals specified in the report.

Companies: American Bankers Association; Consumer Bankers Association; Financial Services Roundtable

MainStory: TopStory CommunityDevelopment

Back to Top

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.