Consumer Groups Tear Into Agencies' First Steps on CRA Reform

May 13, 2013
American Banker  
mortgage lending news

Consumer groups, arguing that regulatory efforts to overhaul Community Reinvestment Act rules do not go far enough, have criticized a March proposal designed to give more CRA credit for out-of-market community development projects. "It may be helpful in the area of community development financing," remarked Joshua Silver, vice president of research and policy at the National Community Reinvestment Coalition. "But it is not helpful in completely capturing the whole range of activities of a bank in making sure its activities are safe and sound and it effectively reaches low- and moderate-income people." Some say regulators have to move gradually, to avoid unforeseen consequences of going too far or too fast. Silver said many community-focused groups were disappointed by the proposal's narrow focus, compared to the interest regulators showed in previous hearings. The proposal would alter language to give banks credit for community development activities in their broader statewide or multi-state region and would ensure that such activities receive another layer of regulatory scrutiny via the bank's CRA exam. Consumer groups are pushing for a more straightforward approach, such as extending the boundaries of an assessment area.
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