NAAHL Emphasizes Role of Community Reinvestment Act in Affordable Housing and Community Development

Last week, NAAHL submitted comments to the Office of the Comptroller of the Currency (OCC) in response to the agency’s request for input on proposed guidance creating a simplified strategic plan process for banks with up to $30 billion in assets to fulfill their Community Reinvestment Act (CRA) requirements.

CRA plays an essential role in supporting economic growth throughout the country. It encourages banks to help meet the credit needs of the communities where they do business, including low- and moderate-income neighborhoods. CRA-qualifying loans and investments help fuel affordable housing development, support small business growth, and promote economic opportunity.

For most banks, their CRA evaluation follows a standard process in which regulators assess the bank’s record of providing credit in the communities where they do business by using tests that vary by the bank’s size. Through the existing strategic plan option, rather than using these standard evaluation methods, banks can tailor a plan to meet their communities’ needs. Banks are then evaluated on their performance relative to the measurable goals set in the plan. These tailored plans take into account the bank’s unique product offerings and business strategy. Any bank can elect to create a strategic plan to comply with CRA.

The OCC’s proposed guidance would supplement existing interagency strategic plan guidance by providing OCC-regulated banks with a form to help banks submit the necessary information in their plan, and a list of elective goals that banks could, at the bank’s option, use to set their measurable goals. These changes are intended to reduce compliance burden and help smaller banks use the strategic planning option.   

In its comment, NAAHL emphasized the essential role of CRA in supporting economic growth throughout the country.

“Given the significant role that CRA lending and investment play in supporting local communities and driving affordable housing supply, it is vital that any changes in the way banks demonstrate their commitments under CRA do not inadvertently reduce credit and investment for low- and moderate-income individuals and neighborhoods,” wrote Sarah Brundage, NAAHL President & CEO.   

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