Agencies Issue Final Updates to CRA Q&As

The federal banking agencies issued revised questions and answers today on Community Reinvestment Act compliance. In their final guidance, the agencies clarified nine of the 10 proposed Q&As. Overall, the agencies revised six existing Q&As and adopted three new ones. The changes focus on alternative delivery of retail banking services, innovative or flexible lending practices, qualified investments and community development.

In a speech earlier this year, Comptroller of the Currency Thomas Curry said that the Q&As would provide guidance on CRA compliance in light of the growth in alternative delivery mechanisms for financial services. For example, the agencies added examples clarifying that alternative credit histories and small-dollar loan programs that serve low-to-moderate-income individuals are considered innovation. However, the agencies withdrew a proposed Q&A emphasizing one aspect of alternative delivery mechanisms due to concerns that the language could be read to undermine the importance of physical branches.

Other key revisions include new Q&As designed to explain what “innovativeness” and “responsiveness” mean and how they will be considered by examiners, as well as a Q&A intended to clarify the distinction between retail services and community development services. The revisions also provide new illustrations and examples related to community development activities.

A preliminary review of the Q&As indicates that the agencies accepted most of the American Bankers Association’s comments and suggestions, although ABA continues to emphasize the need for examiner consistency and training in CRA supervision. ABA plans to publish a staff analysis of the changes in the near future. For more information, contact ABA’s Rob Rowe.