What is CRA reform?

Community Reinvestment Act (CRA) Building on ideas advanced by stakeholders, the Board seeks comment on an approach to modernize the CRA by strengthening, clarifying, and tailoring the CRA regulations to reflect the current banking landscape and better meet the core purpose of the CRA.

What is the purpose of the CRA Act?

The Community Reinvestment Act (CRA), enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods.

What qualifies as a CRA loan?

For CRA, community development is: affordable housing (including multifamily rental housing) for low- and moderate-income individuals; community services targeted to low- and moderate-income individuals; activities that promote economic development by financing small businesses or small farms (gross annual revenues of …

Was the CRA successful?

Other studies find that the CRA has been effective in encouraging financial institutions to lend to redlined neighborhoods. Several analyses conclude that the CRA had a positive influence in encouraging lending to low- and moderate-income borrowers and in low- and moderate-income neighborhoods.

Who does CRA apply to?

CRA applies to FDIC-insured depository institutions, such as national banks, savings associations, and state-chartered commercial and savings banks.

Are CRA ratings public?

Examination ratings are not made public until 45-60 days after the examination has concluded.

What is a consequence of a poor CRA rating?

A negative rating brings a higher level of scrutiny both from the bank’s regulator and the general public. Also, banks are expected to take immediate action to begin correcting the negative CRA rating. Therefore, the bank’s CRA regulator will often shorten the time frame before their next examination.

What are the 4 CRA ratings?

Upon completion of a CRA examination, an overall CRA Rating is assigned using a four-tiered rating system. These ratings are: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance.

What is examined in the CRA lending test?

(a) Scope of test. (1) The lending test evaluates a bank’s record of helping to meet the credit needs of its assessment area(s) through its lending activities by considering a bank’s home mortgage, small business, small farm, and community development lending.

Who regulates CRA requirements?

Three federal regulators—the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), and the Board of Governors of the Federal Reserve System—share an oversight role with respect to the CRA.

What are the four general ratings on the CRA evaluation?

What are the CRA rating categories?

How does the Community Reinvestment Act ( CRA ) work?

The CRA requires federal banking agencies to assess the institution’s record of meeting the credit needs of its entire community, including LMI neighborhoods, consistent with the safe and sound operation of such institution, and take such record into account in its evaluation of an application for a deposit facility by such institution.

When did the Fed issue its own CRA modernization proposal?

The Federal Reserve today issued an advance notice of proposed rulemaking on updating the agency’s three-decade-old Community Reinvestment Act regulations. The Federal Reserve today issued an advance notice of proposed rulemaking on updating the agency’s three-decade-old Community Reinvestment Act regulations.

What should the Fed do about the CRA?

Tailoring CRA supervision based on size, business model, local market conditions, etc. Updating standards to reflect changes in banking over time, including the increased use of mobile and internet delivery channels Strengthening the special treatment of minority depository institutions

When does the OCC CRA rule come out?

The OCC’s CRA rule, published on June 5, 2020, recognizes significant changes to the banking industry and how consumers bank since the last comprehensive revision over 25 years ago. The June 2020 rule clarifies the activities that count for CRA credit, updates where bank activity counts, and evaluates CRA performance more objectively.