On April 3, 2018 the U.S. Department of the Treasury released recommendations to modernize the Community Reinvestment Act (CRA). The recommendations were issued to the primary CRA regulators, the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation. Treasury’s objective in developing these recommendations is to better align CRA activity with the needs of the communities that banks serve, while being conducted in a manner consistent with a bank’s safety and soundness.
Treasury’s recommendations include:
- Updating the definitions of geographic assessment areas to reflect the changing nature of banking arising from changing technology, customer behavior, and other factors;
- Increasing clarity and flexibility of CRA examinations to increase transparency and effectiveness of CRA rating determinations;
- Improving the examination process to increase timeliness of evaluations and increasing accountability for banks’ planning of their CRA activity; and
- Incorporating performance incentives to better serve the CRA’s intended purpose of encouraging banks to meet the credit and deposit needs of their communities. Treasury’s recommendations will incentivize bankers to do more for low- and moderate-income communities, especially in cases where the bank has underperformed in prior assessment periods.
A copy of Treasury’s Memorandum to the primary CRA regulations is available at: https://home.treasury.gov/sites/default/files/2018-04/4-3-18%20CRA%20memo.pdf
Information about Compliance Resources’ upcoming webinar entitled Identifying and Documenting Community Development Activities is available at: https://mycomplianceresource.com/event-registration/?ee=169