OFN Weighs in on Federal Reserve CRA Reform Proposal

Dafina Williams

Federal bank regulators continue efforts to update the Community Reinvestment Act (CRA) regulations. On February 16, OFN submitted comments to the Federal Reserve on their Advanced Notice of Proposed Rulemaking (ANPR).

The Fed’s proposal is a vast improvement over the rule promulgated by the Office of the Comptroller of the Currency (OCC) last year. Many aspects of the Fed’s framework are positive reforms, but the proposal does not go far enough to address our nation’s systemic economic and racial challenges.

View OFN’s comment letter.

OFN’s comments focus on the following aspects of the ANPR:

  • Partnerships with CDFIs – Investments and loans to CDFIs, regardless of where the CDFI is located, would receive positive CRA consideration. OFN is pleased to see this in the proposal but is concerned that its placement in the evaluation framework is insufficient to encourage meaningful investments.
  • Focus on Race – CRA is a civil rights law created to address the redlining of low-wealth and minority communities. A more explicit focus on increasing CRA activity in communities of color is both appropriate and imperative.
  • Investing in Areas of Designated Need – Providing CRA credit for community development activities outside of assessment areas could encourage more investments in areas of high need, but those activities must be targeted.
  • Community Development Test – Evaluating large bank community development lending, investment, and services under a separate community development test is a positive reform. However, many more small banks would be exempted from community development obligations under this proposal.

The next steps in the CRA reform process will be impacted by new leadership at the OCC and the willingness of bank regulators to work together on a joint rule. OFN will continue to advocate for the OCC’s CRA rule to be rescinded and the OCC, FDIC, and Federal Reserve to work together to develop a joint regulatory framework.

For more information on OFN’s CRA advocacy, contact Dafina Williams, SVP, Public Policy.

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