American Bankers Association staff yesterday met with senior Treasury Department officials to provide recommendations for modernizing the Community Reinvestment Act. Treasury is comprehensively assessing how to improve CRA to better align banks’ CRA investments with the needs of their communities.
ABA staff pointed out that Treasury and the banking agencies can make significant improvements to CRA supervision by instituting specialized interagency training for CRA examiners and by providing timely examination reports. ABA also emphasized that CRA ratings should reflect CRA compliance and should not be used as a general enforcement tool. Modernizing what constitutes an “assessment area” to address advances in technology and consumer preferences will be key to CRA reform and will need to be workable for banks of all sizes and business models, ABA staff added. In addition, banks that are responsive to their assessment area should receive credit for activities outside the defined assessment area.
CRA reform should also provide banks with greater certainty regarding which investments and activities qualify for CRA credit, ABA staff told Treasury officials. In particular, initiatives that benefit all residents of a community should be given community development credit, not just those that are targeted to low- and moderate-income individuals. ABA also reminded Treasury that there is currently not a mechanism in place to confirm whether credit unions earn their tax-exempt status by reinvesting in their communities. For more information, contact ABA’s Krista Shonk.