Banking Law Prof Blog

Proposed Amendments to CRA Rules - The Comment Period is Open

The federal banking agencies (OCC, FRB, OTS, and FDIC) are proposing amendments to their Community Reinvestment Act regulations.  The comment period will extend for 30 days after publication in the Federal Register.

Changes incorporate a statutory requirement that the banking agencies consider low-cost education loans to low-income borrowers as a factor in evaluating a financial institution's record in meeting community credit needs.

Other proposed changes to the relevant factors include:  capital investment, loan participation, and other ventures undertaken with minority and women-owned financial institutions and minority credit unions.

Link to Proposed Regulations:  http://www.fdic.gov/news/board/june2309no8.pdf

(ag) June 28, 2009, in CRA

CRA in Hard Times

Just a question:  Now that the economy is making finances tough all over, what's the effect on Community Reinvestment Act activities by banks?

(ag) May 17, 2009 in CRA

CRA: It's Not Just for Low to Moderate Income Anymore

Comptroller of the Currency John Dugan emphasized the new housing legislation's expansion of focus, encouraging national banks to lend to middle income areas in addition to low and moderate income. 

Link: http://www.occ.gov/ftp/release/2008-92.htm

(ag) July 31, 2008, in CRA/Lending Issues

New Q&A for CRA

The Federal Banking Agencies today announced publication in the Federal Register of Notice and Request for Comment on both new and revised Questions and Answers relating to the Community Reinvestment Act (CRA).   The preamble points out that three of the revisions encourage financial institutions to work with delinquent borrowers, pointing that CRA credit is available for foreclosure prevention programs aimed at low- and moderate-income borrowers.

Comments are due by Sept. 10, 2007.

Link:  http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/07-3223.pdf

(ag) July 11, 2007, in CRA

Everything About CRA

Check out the FFIEC's website for a very complete set of pages with Community Reinvestment Act (CRA) information.  The latest news is the June release of  Distressed or Underserved Nonmetropolitan Middle Income Geographies that qualify for CRA credit.  A schedule of CRA Examinations scheduled by each of the federal banking agencies can also be accessed from this website.  You can also find explanations of CRA, Geocoding, 2007 changes in asset size threshholds, and much more.

Link:  http://www.ffiec.gov/cra/default.htm

(ag) June 14, 2007, in CRA

Grade Inflation or Good Citizenship?

On Feb. 16, 2007, the OCC released CRA ratings for 21 national banks.  Five were "Outstanding"; Sixteen were "Satisfactory".  None were "Needs to Improve" or "Substantial Noncompliance".

Link:  http://www.occ.treas.gov/ftp/release/2007-13.htm

(ag) Feb. 17, 2007, in CRA

We're from the IRS and we're here to help -- with CRA Credit

Financial institutions that partner with the IRS program called VITA ("Volunteer Income Tax Assistance") and otherwise promote financial education and banking services for underserved low- and moderate-income taxpayers may receive CRA credit. 

A new change in the tax law allows taxpayers to split portions of their direct-deposited tax refunds in up to three different savings and checking accounts, with up to three different U.S. financial institutions. This is intended to encourage taxpayers to place part of the tax refund into a savings account.

FDIC has provided related information for taxpayers and for banks:

Link to FIL-5-2007 -  "Volunteer Income Tax Assistance (VITA) - A Reminder and Update About Potential CRA and Business Opportunities" (Jan. 16, 2007):   http://www.fdic.gov/news/news/financial/2007/fil07005.html#body

Link to FDIC Press Release:  "FDIC Encourages Taxpayers to Take Advantage of IRS Programs and Save More of Their Refunds" (Jan. 16, 2007):  http://www.fdic.gov/news/news/press/2007/pr07006.html

(ag) Jan. 23, 2007, in CRA

Revised Dollar Thresholds for "Small Bank" under CRA

The Federal Banking Agencies have jointly published revisions to the definitions of "small bank" and "intermediate small bank" for Community Reinvestment Act purposes. 

Remember that the Federal Banking Agencies revised the CRA regulations as of September 1, 2005, to define "small banks" as those with assets of less than $1 billion. Small banks with assets of at least $250 million as of December 31 of both of the prior two calendar years and less than $1 billion as of December 31 of either of the prior two calendar years are “intermediate small banks.” 12 CFR 25.12(u)(1).

The agencies make annual adjustments to these dollar figures based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPIW).

During the period ending November 2006, the CPIW increased by 3.32 percent. So, beginning January 1, 2007, banks that, as of December 31 of either of the prior two calendar years, had assets of less than $1.033 billion are “small banks.” Small banks with assets of at least $258 million as of December 31 of both of the prior two calendar years and less than $1.033 billion as of December 31 of either of the prior two calendar years are “intermediate small banks.”

Link:  http://www.occ.treas.gov/fr/fedregister/71fr78335.pdf

(ag) Jan. 22, 2007, in CRA

CRA Info - How Does Your Bank Rate?

On Jan. 9, 2007, FDIC published its most recent list of state non-member banks examined for CRA compliance.

Link:  http://www.fdic.gov/news/news/press/2007/pr07005.html

Link to most recent CRA Info from OTS:  http://www.ots.gov/pagehtml.cfm?catNumber=22

Link to CRA information for Fed Member Banks:  http://www.federalreserve.gov/dcca/cra/

LInk to CRA information for National Banks:  http://www.occ.treas.gov/cra/electric.htm

(ag) Jan. 9, 2007, in CRA

Want to Know About the SBA's 504 CDC Loan Program?

The OCC is hosting a web and telephone seminar Jan. 31, 2007.  The cost in nominal & the content looks great.  Topics include:  How the SBA 504 Certified Development Company Loan Program works; Why Banks & Their Small Business Customers Should Be Interested; Key Risks & Regulatory Concerns; How the Secondary Market for 504 Loans Can Provide Liquidity for Banks; and the CRA Benefits of 504 Loans.

Link:  http://www.occ.treas.gov/SBA_Brochure_(1119).pdf

(ag) Dec. 4, 2006, in CRA/Lending Issues

CRA: Should the OTS Get In Step?

The OTS Notice of Proposed Rulemaking on CRA was published in the Federal Register on Nov. 24, 2006.  The Comment Period is 60 days from publication.  The OTS seeks comments on whether it should align its CRA Rules with those of the other federal banking agencies.

Link:  http://www.ots.treas.gov/docs/7/776054.html

(ag) Nov. 27, 2006, in CRA

 

CRA-Related News from the OCC

Two items of interest from the OCC:

1.  OCC released a new report on Nov. 15, 2006, entitled "Reaching Minority Markets - Community Bank Strategies".  Link:  http://www.occ.treas.gov/toolkit/newsrelease.aspx?&Doc=2MK9VOR7.xml

2.  Comptroller John C. Dugan toured Pittsburgh Community Reinvestment Projects on Nov. 16, 2006, and delivered remarks highlighting national bank achievements with CRA investments.  Link:  http://www.occ.treas.gov/toolkit/newsrelease.aspx?&Doc=9Z75PHY3.xml

(ag) Nov. 16, 2006, in CRA

Bernanke Talks About CDFIs as a Solution to Market Failures

Fed Chairman Ben Bernanke delivered remarks today to the Opportunity Finance Network's Annual Conference in Washington, D.C.  He stressed the positive contributions of Community Development Financial Institutions (CDFIs) in lending to the otherwise underserved and in promoting homeownership.  When Bernanke talks about CDFIs as a Solution to Market Failures, he is speaking as an economist.  Here's how he explains it: 

"Standard economic analysis tells us that when competitive conditions prevail in a market, the resulting prices induce firms and individuals to allocate resources in a manner that tends to maximize social welfare.  However, economimsts also recognize that various deviations from idealized market conditions, termed market failures, can inhibit the efficient allocation of resources."

For us non-economists, he's saying that low-income people can't always get standard loans -- and that may not be optimal for our economy.  CDFIs concentrate on making loans to underserved borrowers and neighborhoods -- and with that focus, they can be good at what they do.  Bernanke notes in his speech, that loan losses for CDFIs approximates that for commercial banks.

For banks:  Remember that loans to and investments in CDFIs count for CRA purposes!

Link to Speech:  http://www.federalreserve.gov/boarddocs/speeches/2006/20061101/default.htm

If you need more information about CDFIs and what they are, here's a link:  http://www.cdfi.org/whatare.asp

Link to Information about the Treasury Department's CDFI Fund created pursuant to the Reigle Neal Act:  http://www.cdfifund.gov/who_we_are/about_us.asp

(ag) Nov. 1, 2006, in Consumer Protection, Federal Banking Agencies - FRB, Lending & CRA

Remember: CRA Ratings Are Easy to Obtain On Agency Websites

Don't forget that finding the CRA rating for banks is very easy:

For national banks:  http://www.occ.treas.gov/cra/crasrch.htm

For state nonmember banks:  http://www2.fdic.gov/crapes/

For state member banks:  http://www.federalreserve.gov/DCCA/CRA/crarate.cfm

(ag) Nov. 1, 2006, in CRA

Reg Relief & CRA - Understanding the New Higher Public Welfare Investment Limit

One result of the Financial Services Regulatory Relief Act of 2006 is to increase the Public Welfare Investment ceiling from 10% to 15% of a bank's capital & unimpaired surplus.  Anything over 5% will still require approval from the primary federal regulator based on a determination that the additional investment will not pose a risk to the deposit insurance fund and that the bank is not undercapitalized. 

Link to OCC's Oct. 23, 2006, Bulletin:  http://www.occ.treas.gov/ftp/bulletin/2006-44.html

(ag) Oct. 23, 2006, in CRA/Reg Relief

Fed Chairman Decries Regulatory Burden, Discusses BSA, CRA, Capital Standards (Basel II) and the Reg Relief Act

In remarks delivered Oct. 16, 2006, before the Annual Conventions of the American Bankers Association (in Phoenix) and America's Community Bankers (San Diego, via satellite), Ben S. Bernanke, the relatively new Chairman of the Board of Governors of the Federal Reserve System, looked at bank regulation through an economist's lens:  cost benefit analysis.  That's good new for bankers.  He appears to be a proponent of reducing regulatory burden. 

Bernanke talked specifically about three key areas bankers often complain about:  BSA, CRA, and Capital Standards.  He also highlighted the following provisions of the Regulatory Relief Act:  authority for the Fed to pay interest on sterile reserves and discretion to lower the reserve ratio (although unfortunately, not effective until 2011); authority for the Fed to pay interest on voluntary deposits with the Fed, including contractual clearing balances and excess reserve balances;  immediately raising the asset ceiling from $250M to $500M for banks that can qualify to extend the exam cycle from 12 months to 18 months if they are well-capitalized and well-managed; and the requirement for the Fed and the SEC to issue joint regulations regarding "broker" exceptions for banks under GLBA.

Link to Speech:  http://www.federalreserve.gov/boarddocs/speeches/2006/20061016/default.htm

(ag) Oct. 17, 2006, in Federal Banking Agencies - FRB, Regulatory Relied, BSA, CRA, Capital Requirements (Basel II)

Check Out the OCC's CRA E-Zine

Need an update on how banks and examiners are dealing with the 2005 CRA Revisions?  The OCC's E-Zine contains excellent information.  The articles are particularly helpful regarding the Intermediate Small Bank exam.

Link to the Summer 2006 "Community Developments - Investments":

http://www.occ.gov/cdd/summer06/index.html

(ag) Oct. 1, 2006, in CRA