Statement from the Low Income Investment Fund on Proposed Rule Changes to the Community Reinvestment Act
On December 12, 2019 the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) released a joint notice of proposed rulemaking on changes to the Community Reinvestment Act (CRA). There will be a 60-day comment period beginning when the rule is posted in the Federal Register.
In response to the proposed changes from the OCC and FDIC, Low Income Investment Fund (LIIF) CEO Dan Nissenbaum issued the following statement:
“LIIF takes any proposed changes to CRA regulations very seriously given the widespread implications for CDFIs, our financial institution partners, and most importantly, the communities we are all working to serve. We are in the process of reviewing the proposed rule, the most far-reaching reform of CRA in over a quarter-century. We are pleased that the OCC and FDIC recognize the essential role of community development in CRA. We are encouraged also that they emphasize their desire to increase community development investments in a broader range of low- and moderate-income communities, in addition to acknowledging the critical role of CDFIs.
We do, however, have serious concerns about the community development elements of the proposed rule; namely, that it could weaken CRA’s emphasis on proven models for the most impactful community development activities, as well as the actual volume of investments made. Our top priority is ensuring that CRA continues to incentivize banks to support CDFIs who directly support that work, investing in the often innovative, complex projects and initiatives that are most effective in helping low income families and communities address their pressing challenges. We will be sharing our perspective with the regulators over the coming months.”
The Federal Reserve is the third regulator that oversees CRA, but notably it did not choose to join the OCC and FDIC in issuing this notice of proposed rulemaking. This diverges from previous rulemaking on CRA, which is typically carried out jointly by all three regulators. It is possible that the Federal Reserve will announce its own process for updating CRA regulations in the near future.
LIIF will provide additional information on our blog as we analyze the proposed rule changes. For more information about our previous comments on CRA, see our 2018 comment letter to the OCC and our blog on the opportunities and challenges for community development in CRA modernization.