ICBA Urges Changes to Community Reinvestment Act Proposal

Washington, D.C. (April 8, 2020) — The Independent Community Bankers of America® (ICBA) today called on federal regulators to make needed changes to their proposal to reform Community Reinvestment Act regulations to promote equitable, consistent, and transparent implementation of the law.

"ICBA and the nation's community banks appreciate regulatory efforts to modernize the Community Reinvestment Act, whose mission of maximizing the availability of financial services and credit in local communities is the essence of community banking," ICBA President and CEO Rebeca Romero Rainey said today. "We hope that the federal banking regulators will continue to work with stakeholders to create a more refined, uniform, and transparent rule."

In a comment letter to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., ICBA said it generally supports modernizing CRA regulations to enhance transparency and reflect banking industry changes driven by technology.

It also specifically appreciates provisions in the proposal to create a list of pre-approved CRA activities and a process by which banks can receive regulator confirmation that a loan or activity qualifies for CRA credit. However, ICBA said, community banks are concerned the new regulatory framework is too complex and would impose new and excessive data-collection costs.

  • Among its recommendations, ICBA called on regulators to:
  • Allow community banks up to $5 billion in assets to opt into the revised framework to avoid excessive burdens on these local institutions and a one-size-fits-all approach.
  • Exempt traditional, branch-based banks from tracking the location of deposits and delineating deposit-based assessment areas.
  • Continue working with the Federal Reserve Board to create a uniform CRA rule.
  • Publish examiner’s guidance on documentation requirements before beginning exams under the new framework to alleviate uncertainty.
  • Continue working with stakeholders to develop a metric that addresses changing technology and stays true to CRA’s purpose of expanding access to credit in low- and moderate-income communities before finalizing a performance evaluation framework.
    • The proposed complex dollar-based metric favors large loans and investments over more numerous small loans to LMI families while undervaluing activities such as community development services.
    • Nationwide benchmarks to establish a presumptive rating are not sufficiently tailored for individual banks, especially community banks, and deemphasize the CRA’s core focus on serving the needs of individual communities.

ICBA will continue working with the regulatory agencies on the CRA modernization initiative.

About ICBA
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ nearly 750,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, nearly $4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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