The comment period for the Federal Reserve Board’s (Board’s) advance notice of proposed rulemaking (ANPR) to modernize the Community Reinvestment Act (CRA) is closed. The CRA helps low- and moderate- income (LMI) communities gain access to financial services, loans, and community development investments that would otherwise be unavailable. It has been an important driver of financial institution investment in the Low-Income Housing Tax Credit, the New Markets Tax Credit, and Community Development Financial Institutions.
Enterprise submitted its comments to the Board providing a number of recommendations, namely, how best to evaluate a bank’s community development activity and encourage affordable housing development. Enterprise also commended the Board for its emphasis on addressing discrimination and redlining as central to the purpose of the CRA.
In June 2020, the Office of the Comptroller (OCC), one of the other banking regulators charged with overseeing the regulation of the CRA, issued its own separate, final rule to modernize the CRA. However, with the Biden administration expected to appoint a new OCC head, the consensus view is that the OCC’s final rule is likely to be repealed. If that is the case, it is expected that the Fed’s ANPR will serve as the basis for the three regulators – the Federal Deposit Insurance Corporation being the third banking regulator – to establish one, final CRA rule. Enterprise encourages the three banking regulators to come together to issue a joint, final CRA rule that aligns with the original purpose of the CRA – to provide financial services that address historic inequities in credit access and effectively meet the needs of LMI communities.