NAAHL Calls for Consistency and Alignment in Regulatory Comments on the Community Reinvestment Act

Last week, NAAHL submitted comments to the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) in response to their request for comment on the Community Reinvestment Act (CRA). The regulators’ joint request, pursuant to the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA), asked for feedback to ensure the regulators’ existing regulations, including CRA regulations, are clear and to reduce regulatory burden while also ensuring consumer protection and safety and soundness.

CRA plays an essential role in supporting economic growth throughout the country. It encourages banks to help meet the credit needs of the local communities in which they are chartered, including the low- and moderate-income homeowners, small businesses, and small farms in these communities. It also supports critical investments in affordable housing and community development that help grow local economies.

In its comment, NAAHL reiterated its support for the regulators’ proposal to reinstate the 1995 CRA rule. Reinstating the 1995 rule will provide certainty for banks and communities so that they can support and expand the meaningful, long-term lending, investments, and partnerships that create economic opportunity and are the hallmarks of CRA. NAAHL also highlighted subregulatory guidance and tools that would provide additional clarity for banks in meeting the affordable housing and community development needs of the areas they serve.

In addition, NAAHL urged regulators to align their regulations governing banks’ ability to make public welfare investments (PWI). While outside of the CRA regulation, public welfare investments help banks fulfill their CRA requirements and support affordable housing and economic development. NAAHL urged the Federal Reserve to update its Regulation H to ensure qualifying investments under CRA also qualify as PWI and that Federal Reserve-regulated banks can make these investments in a timely way, consistent with the policies at the OCC and FDIC. This update would also ensure all banks are treated similarly, regardless of their charter type.

“CRA is central to NAAHL members’ housing and community development work. Regulatory certainty is essential for an effective CRA, and NAAHL strongly supports the agencies’ joint proposal to provide that certainty by reinstating the 1995 CRA regulation,” NAAHL Senior Director Megan Cheney emphasized during an October 30th public outreach session hosted by the regulators. “We also encourage the agencies to implement interagency subregulatory guidance and tools to further reduce regulatory burden and help banks maximize their impact in low- and moderate-income communities.”  

NAAHL will continue to engage with regulators as they work to provide the certainty banks and communities need to support meaningful affordable housing and community development loans and investments through CRA.