Jennifer A. Vasiloff & Dafina Williams
The March 9 deadline is fast approaching for members of the public to submit comments to the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) regarding proposed changes to the Community Reinvestment Act (CRA) regulations.
OFN has published our draft recommendations so community development financial institution (CDFI) supporters can understand our views on an issue of critical importance to the people and places CDFIs serve.
The Notice of Proposed Rulemaking (NPR) published by the OCC and FDIC outlines extensive modifications to the current CRA regulatory framework. If adopted, the banking industry and all CRA stakeholders will face significant changes in what type of bank loans and investments will count as CRA eligible. There will also be changes in where CRA activities count and, most importantly, how a bank’s CRA performance is measured.
OFN has concluded that the performance evaluation framework outlined in the NPR would weaken the banking industry’s requirements to serve low-wealth markets in significant ways. By relying heavily on a dollar-volume ratio to determine a bank’s CRA rating, the proposed changes could result in banks making fewer mortgage and small business loans in low- and moderate-income (LMI) communities, as well as less financing for critical community development activities. This flaw in the performance evaluation design is so fundamental that it outweighs any other positive changes included in the NPR.
OFN has not arrived at this conclusion without careful study and extensive consultation with CDFI leaders, allies, and bank partners. Whether you incorporate OFN’s recommendations into your comment letter or submit different views, please make your voice heard by the March 9 deadline.
If you can include examples of how your community or CDFI may be impacted, please do so. The OCC and FDIC will be reviewing both the volume and substance of comments closely to determine public response to the reform proposal. It is crucial that advocates for community reinvestment voice their opinions.