From:
To: Comments
Subject: [EXTERNAL MESSAGE] RIN 3064-AF22
Date: Monday, February 03, 2020 4:43:53 PM
Feb 3rd, 2020
RE: Notice of Proposed Rulemaking, Community Reinvestment Act Regulations
I oppose the proposed changes to the Community Reinvestment Act (CRA) regulations as deeply
misconceived. The OCC and FDIC would lessen the public accountability of banks to their
communities by enacting unclear performance measures on CRA exams that would not
accurately measure a bank’s responsiveness to local needs. Contrary to the agencies assertions
that their changes would increase clarity and CRA activity, the result will be significantly fewer
loans, investments and services to low- and moderate-communities (LMI).
Underserved communities have withstood enough trampling on by government, especially in
South Florida. Gentrification and building railways through thriving communities, being just 2
examples.
The agencies would dramatically lessen CRA’s focus on LMI communities in contradiction to the
intent of the law to address redlining. The definition of affordable housing would be relaxed to
include middle-income housing in high cost areas. In addition, the Notice of Proposed Rulemaking
(NPRM) would count rental housing as affordable if lower-income people could afford to pay the
rent without verifying that lower-income people would be tenants.
The NPRM would add financing large infrastructure such as bridges as a CRA eligible activity.
Even financing “athletic” stadiums in Opportunity Zones would be an eligible activity. The NPRM
would define small businesses and farms as having higher revenues, increasing the limit from $1
million to $2 million for small businesses and as high as $10 million for family farms.
While the NPRM recognizes changes in the banking industry such as the increased use of online
banking, the NPRM’s reforms to the geographical areas on CRA exams are problematic and
would reduce transparency. Neither the agencies nor the public can evaluate the agencies’
proposal to designate additional geographical areas on exams in the case of internet banks due to
the lack of publicly available data. The public does not have a fair chance to offer comments on
the effectiveness of significant proposed changes whose impacts are unknown.
The proposal would retain a retail test that examines home, small business and consumer lending
to LMI borrowers and communities but this retail test would only be pass or fail. In contrast, the
current retail test has ratings that count for much more of the overall rating. Moreover, the
proposal would result in branch closures since it would eliminate the test that scrutinizes bank
branching and provision of deposit accounts to LMI customers.
The agencies also propose to allow banks that receive Outstanding ratings to be subject to exams
every five years instead of the current two to three years. This would result in banks not making
much effort in the early years of an exam cycle to serve their communities.
Small banks with assets less than $500 million could opt for their current streamlined exams
instead of the new exams. The new exams would require banks to engage in community
development financing while the existing small bank exams do not. This is another loss for
communities.
Instead of weakening CRA, the agencies must enact reforms that would increase bank activity in
underserved neighborhoods. The agencies do not address persistent racial disparities in lending
by strengthening the fair lending reviews on CRA exams or adding an examination of bank activity
to communities of color in CRA exams. At the very least, the agencies could add a category on
CRA exams of underserved census tracts, which would likely include a high number of
communities of color. The agencies also require banks to collect more data on consumer lending
and community development activities but do not require banks to publicly release this data on a
county or census tract level. Finally, the agencies do not require mandatory inclusion on exams of
bank mortgage company affiliates, many of whom engaged in abusive lending during the financial
crisis.
This deeply flawed proposal would result in less lending, investing and services for communities
that were the focus of Congressional passage of CRA in 1977. This backtracking will violate the
agencies’ obligation under the statute to ensure that banks are continually serving community
needs. The FDIC and OCC need to discard the NPRM, and instead work with the Federal
Reserve Board and propose an interagency rule that will augment the progress achieved under
CRA instead of reversing it.
