Comments Needed on Proposed Community Reinvestment Act Rules

New rules for banks with assets between $250 million and $1 billion would weaken the Community Reinvestment Act ( CRA). The regulators proposing the rules—the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of Currency—must hear that you are against the weakening of the CRA. For contact information on the regulators as well as sample comment letters for community organizations and concerned citizens, see www.ncrc.org/policy/analysis/policy/FDICOCCFED_proposal.php. The comment period ends on May 10.

While the changes in the CRA are significantly better than those proposed in the fall, serious issues remain. One concern is that the number and location of bank branches will no longer be a criterion for compliance with the CRA. This would reduce the number of mainstream financial institutions in low-income communities. Another problem is that bank services will be evaluated under an examination that will not measure how often products and services targeted toward low-income people actually reach their intended clientele. Also, the new rules include reductions in publicly available data; this would make it difficult to discover if institutions are meeting the needs of small businesses, farmers, or affordable-housing and community development lending. The proposed elimination of the separate investment test would most likely result in lower levels of investment in underserved communities.

The CRA is a vital tool for organizations trying to expand economic opportunities in low-income communities. Community organizations often use the CRA as leverage to get the much-needed support of financial institutions.

For more information on the CRA, go to www.ncrc.org or contact Hannah Avellone at 312.368.8575.