Too Much Lost In Proposed Regulations
May 19, 2020
Now is not the time for the federal government to press ahead with changes to the Community Reinvestment Act, or CRA as it is commonly known. That was the consensus of industry experts, researchers, and consumer advocates speaking recently at an Urban Institute event.
They told the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), which proposed comprehensive and dramatic changes to the regulations at the end of last year, to slow down, take a deeper look, and work with their colleagues at the Federal Reserve to propose a new set of regulations, according to an Urban Institute blog post.
The panel included Krista Shonk, vice president for regulatory compliance policy with the American Bankers Association; Josh Silver, senior advisor for the National Community Reinvestment Coalition; Laurie Goodman, vice president at the Urban Institute; Ellen Seidman, a nonresident fellow in the Housing Finance Policy Center; and, Benson F. “Buzz” Roberts president and CEO of the National Association of Affordable Housing Lenders.
Here are some of the objections addressed by them:
The proposed rule changes the key metric for evaluating CRA performance from the number and share of loans made to LMI borrowers or in LMI census tracts to the share of deposit dollars on a bank’s balance sheet invested in CRA-eligible activities.
The panelists also noted that the proposal includes no data that would help the public understand the proposal’s likely impact on banks’ performance and on their communities, thus inhibiting public comment on the proposal’s impact.
The panelists were also alarmed at the significant loss of public information proposed in the rule. Goodman noted the proposal eliminates any geographic disclosure of individual banks’ activities and aggregates activities of all banks at the county level. As a result, it would be impossible for anyone to see what a specific bank is doing in a specific community.
Northeast Midsize Companies Less Than Optimistic About Local Economy
The Bottom Line
Most financial institutions have tremendous excess capacity in their existing branches today.