Community Reinvestment Act
July 22, 2022: OCDCA submits Community Reinvestment Act (CRA) comments to Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
OCDCA submitted a five-page letter to the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation addressing concerns and improvements in their Notice of Proposed Rulemaking (NPR) on the Community Reinvestment Act (CRA). Comments are due at 11:59 PM on August 6th 2022. Read our comment letter.
February 12, 2021: OCDCA Submits Comment on Federal Reserve’s ANPR on CRA
OCDCA submitted a four-page letter to the Federal Reserve Board of Governors on Friday addressing concerns and improvements in their Advanced Notice of Proposed Rulemaking (ANPR) on the Community Reinvestment Act (CRA). Comments are due at 11:59 PM on February 16th. Read our comment letter.
February 2, 2021: Deadline approaching to submit comment to the Federal Reserve
Submit comments by February 16 for the Federal Reserve Board's Advance Notice of Proposed Rulemaking on the Community Reinvestment Act (CRA). The Fed proposal improves upon the current CRA exam structure in contrast to previous rulemaking by the Office of the Comptroller, which dramatically weakens CRA. These two federal agencies regulate different banks and were unable to agree upon common rulemaking. NCRC has posted sample comment letters.
December 1, 2020: Updates to the CRA
The Federal Reserve Board of Governors released an Advanced Notice of Proposed Rulemaking (ANPR) for the Community Reinvestment Act (CRA). Comments are due by February 16. Suzanne Killian from the Fed summarized the ANPR at the NACEDA Summit in October. President-elect Biden made CRA reform a notable piece of his policy platform during the campaign. However, hurdles remain for him to implement his agenda as it relates to CRA, including an uncertain partisan makeup in the Senate, and how (or if) he can replace Brian Brooks, Acting Comptroller of the Currency. The OCC finalized its rule in May. Advocates have called on President-elect Biden to scrap the OCC's rule and proceed with a new CRA rule under the Federal Reserve's leadership.
November 4, 2020: Federal Reserve seeks comments on an approach to modernize the Community Reinvestment Act
The Board of Governors of the Federal Reserve System is publishing for public comment an advance notice of proposed rulemaking (ANPR) to solicit public input regarding modernizing the Board's Community Reinvestment Act regulatory and supervisory framework. The Board is seeking comment on all aspects of the ANPR from all interested parties and also requests commenters to identify other issues that the Board should consider.
This is an important time to make your voice heard! You can read the proposal and submit comment here. Comments are due February 16, 2021.
June 6, 2020: US House of Representatives Expected to Vote on Congressional Act Resolution
The US House of Representatives is expected to vote as soon as next week on a Congressional Review Act resolution to reverse the Office of the Comptroller of the Currency's (OCC) new Community Reinvestment Act (CRA) rule which takes effect in October.
The new final OCC rule will divert money from low-and moderate-income communities and the community development sector. The core of the final rule is the same as the proposal: a flawed CRA evaluation measure, maintains the "single-metric" approach to CRA exams, banks can invest outside of their assessment area and get credit, makes illogical activities eligible such as defining bridge infrastructure as community development and so on. An analysis from the National Community Reinvestment Coalition (NCRC) spells out the serious problems. Neither the Federal Deposit Insurance Corporation nor the Federal Reserve signed on to the final rule changes.
Please urge your US House Representative to Co-Sponsor and Vote for H.J. Res 90.
Strong Congressional support for this resolution could lay the groundwork for the next Congress to reverse the OCC's harmful new CRA rule.
May 29, 2020: OCC Issues Final CRA Rule in the Face of Massive Flaws and Opposition
On May 20 the Office of the Comptroller of the Currency (OCC) announced a final CRA rule with a list of CRA qualifying activities. Comptroller Joseph Otting, the Trump appointee who slammed through the rule, has resigned and will be leaving his post today in the middle of a national economic crisis. Surprisingly the Federal Deposit Insurance Corporation (FDIC) decided not to join the OCC. The Federal Reserve was already in disagreement.
Reaction from advocates has been clearly negative. Jesse Van Tol, CEO of the National Community Reinvestment Coalition (NCRC) said “This is an awkward, disjointed and rushed move by a single agency that couldn’t get agreement from the two other agencies that regulate banks within the same administration. The OCC should have been able to agree and work with the other two agencies that oversee enforcement of the same law. It couldn’t. It failed. That’s an administrative fiasco…. He (Otting) just made a regulatory mess and he isn’t sticking around to fix it.”
Comptroller Otting also took the highly unusual step of privately lobbying the country’s largest financial institutions to support his crusade. Think about that – the regulator lobbying the regulated.
“I'm not at all surprised by the reckless speed at which the OCC finalized the rule,” said NACEDA Executive Director Frank Woodruff. “Comptroller Otting has choreographed the illusion of rulemaking since day one, putting forward his misguided single ratio approach over the objections of communities, advocates, banks, and his fellow regulators. I find it exceedingly hard to believe the OCC has carefully considered over 7,500 comments in 41 days while simultaneously managing our country's financial health during a global pandemic.”
“The OCC’s approach to CRA reform was always misguided, secretive, and suspect. The fact that the OCC would issue a new rule in the midst of a global pandemic and just a few weeks after the overwhelming majority of the 7,500 comments raised a myriad of serious concerns, directly illustrates that this effort was never about bolstering access to capital in low-income communities. It was always about gutting this most important law while dismissing our beloved communities,” said Nate Coffman, Executive Director of the Ohio CDC Association.
This is not over. NCRC and partners have pledged to file litigation. Practically rolling out the new rules will take a couple of years or more also creating potential opportunities for legislative and/or administrative solutions. Although the OCC may have ignored the overwhelming dissent in the public comments, the comments remain valuable to future litigation and legislative/administrative advocacy. OCDCA greatly appreciates the many members that have advocated against this harmful rule.
Thank you to everyone who submitted public comment to the OCC and FDIC. View OCDCA’s comments.
March 19, 2020: Check out the latest edition of the Doorsteps podcast, put out by Dr. Cody Price at the Ohio Housing Finance Agency, which features our Executive Director, Nate Coffman discussing CRA reform. No Community Reinvestment Act, No Community Development: Proposed Changes to the CRA.
Articles & Op-Eds:
NEWS RELEASE: New Bank Rules Threaten Investment in Ohio’s Struggling Communities
Pulling the Rug from Under Community Development? - Shelterforce
Civil rights and housing advocates warn proposed change to federal law could spell return of redlining - Cleveland Plain Dealer
New Rules Would Bring Back Redlining - Cincinnati Enquirer
Redlining Would Be Relegalized By CRA Reform Proposal - Shelterforce
Changing Rules to Help Bankers and Hurt Poor Neighborhoods - New York Times
Rule Change Could Allow Redlining to Resume - Columbus Dispatch
Op Ed - Don’t Gut the Community Reinvestment Act
January 29, 2020: You may have heard the term “redlining,” a practice started in the 1930’s to describe the discriminatory act of marking off neighborhoods, using a red marker or pen on a map, where banks would deliberately avoid lending based on race, ethnicity, or religion. The results are unfortunately well known and are still with us today. In fact, a recent study confirmed that 74% of neighborhoods marked off and declared hazardous in the 1930's are low-to-moderate (LMI) income today.
Not until civil rights activists led the national fight in 1977 to pass the Community Reinvestment Act (CRA), were banks required to invest in the communities they serve. CRA is now at risk of being dismantled allowing for modern-day redlining.
CRA requires lending to poor communities, and banks are evaluated on their lending practices. Forty-plus years later, we can say with confidence that the CRA has made significant improvements to provide access to credit. The law has led lenders to make billions of dollars worth of loans and investments in underserved communities for affordable housing, small businesses, and economic development.
We may be taking a trip back in time reversing hard fought progress. On January 9, the Office of the Comptroller of the Currency (OCC) led by Trump appointee Comptroller Joseph Otting released a proposal to dramatically revamp the regulations behind the CRA. The Federal Deposit Insurance Corporation (FDIC) joined the OCC, and the Federal Reserve is not in agreement. There’s much to be concerned with in the 240-page proposed technical rule, but three issues demonstrate its danger to communities throughout Ohio.
How it counts – Banks are currently assessed on the goal of serving all communities where they do business. The proposed rule would institute an overly simplified scoring system (known as single metric) that would disregard whether the lending needs of the local community are being served by the banks. It incentivizes large deals over access to loans for LMI mortgages and small businesses.
Where it counts – The new rating system would allow banks to disregard up to 50% of their assessment area and still get a passing grade — something that isn’t possible under current CRA regulations. This is an invitation to a modern form of redlining where one can envision bank investments deployed in gentrifying neighborhoods while disinvesting in historically disenfranchised neighborhoods.
What counts – It dramatically and irresponsibly expands what activities would be eligible for CRA credit to investments unrelated to the intent of CRA. For example, the building of stadiums or luxury boxes in many cases would count toward CRA and would in effect diminish small business and mortgage lending. Eligible activities would no longer be required to primarily benefit LMI communities departing from the CRA’s original intent.
Capital is the fuel for the American dream. Without access to capital dreams of homeownership go unfulfilled, businesses don’t open, and our Main Streets deteriorate. To get a sense of what’s at stake, the National Community Reinvestment Coalition (NCRC) estimates that in Ohio, just a modest decrease of 10% in CRA lending would result in a $975 million loss in home and small business lending over a five-year period. That’s nearly $1 billion exiting out of Ohio communities for every 10% reduction in CRA lending.
Why is this happening especially so soon after communities across Ohio are still dealing with the ravages of the great recession’s foreclosure crisis? It’s very telling that the proposal is being led by Comptroller Otting, the former CEO of OneWest Bank, an institution that was forced to settle discriminatory lending practices. When he ran OneWest, government records show only one percent of home purchase loans went to African Americans and three percent to Latinos, even though the bank was headquartered in Southern California home to Los Angeles where 49% of the population is Latino. Otting has a history of dismissing local communities and their needs.
Banks and community organizations such as ours agree that the CRA needs to be modernized and strengthened. Modernized so it reflects the way mobile and online banking has reshaped the industry and strengthened so that it truly reflects community economic needs. This version of reform is not the answer.
This proposal guts CRA and effectively takes us toward a modern form of redlining. We need to encourage robust investment in struggling communities and not rig the system against them yet again.
Nate Coffman is executive director of the Ohio CDC Association