Community Reinvestment Act

Position

  • As long as banks are subject to CRA, credit unions, fintech companies, and any financial firm that serves consumers and small businesses should be subject to CRA in a manner comparable to and with the same asset-size distinctions as banks and thrifts.
  • ICBA urges the agencies to be more transparent during the examination process and provide more guidance to identify what loans and services get credit as well as what data and documentation are needed.
  • Examination and supervision should be consistent across cycles and among agencies.
  • Assessment areas should be identified and delineated by community banks rather than the agencies so that community banks can plan accordingly.
  • Asset thresholds should be increased to reflect the consolidation and growth of the community banking industry.

Background

Credit Unions and FinTech Companies Should Be Subject to CRA

Credit unions and other nonbank institutions that perform “bank-like” functions and offer comparable products and services are not subject to CRA as community banks are. This uneven playing field places community banks at a competitive disadvantage and inhibits their ability to serve their customers and their communities. Multiple studies indicate that credit unions are not meeting even the fundamental mandate of their charter to serve people of modest means; their members have higher incomes and education levels than bank customers.

Consistent Examination and Supervision

The inconsistent manner in which loans and services get CRA credit creates uncertainty for community banks. The inconsistency experienced by community banks between examinations within an agency as well as between agencies makes it difficult for them to determine how well they are meeting their CRA requirements

Geographic Assessment Areas

Regulators are shifting and redefining geographic assessment areas from low- and moderate- income areas to majority minority areas, from census tracts to whole counties, and are increasingly focused on “reasonably expected market areas” (REMAs). This complicates CRA planning and compliance for community banks.

Although REMA is not a new examination tool, there has been a new and increased focus on REMA analysis as an additional component of redlining risk assessment and which can extend or change a community bank’s assessment area. A REMA determination includes, among other factors, the location of a bank’s loan applications and originations. This new aggressive focus from regulators on REMA delineations will discourage community banks from lending to customers outside their CRA assessment area delineations.

Asset Thresholds

The CRA regulations use a tiered approach to evaluating banks. Different evaluation methods are used based on a bank’s size and how it operates. Even though these asset thresholds are adjusted annually based on the Consumer Price Index, they do not reflect the extensive consolidation and growth that has occurred in the industry since 1977 when CRA was adopted. ICBA recommends the asset thresholds be increased accordingly. For “small banks,” we recommend increasing the asset threshold to include all banks with assets less than $5 billion that are not “intermediate small banks.” For “intermediate small banks,” we recommend increasing the asset threshold to include banks with assets between $1.5 billion and $5 billion. “Large banks” would include all banks with assets of $5 billion or more. Once changed, all of these asset thresholds should be subject to annual adjustments based on the percentage increase in total assets of all insured depository institutions.

Staff Contact:  Lilly Thomas

Articles & Press Releases

Title Publication Date
Fed’s Brainard: People Want Joint CRA Reform NewsWatch Today Article 02/04/19
Agencies Adjust CRA Asset-Size Thresholds NewsWatch Today Article 12/21/18
ICBA Urges Greater CRA Consistency NewsWatch Today Article 11/20/18
ICBA Urges Community Reinvestment Act Modernization Press Release 11/19/18
Gruenberg: CRA Reform Should Preserve Community Focus NewsWatch Today Article 10/30/18
Agencies Release 2017 CRA Data NewsWatch Today Article 10/26/18
OCC Kicks Off CRA Review​ News, NewsWatch Today Article 08/29/18
ICBA Statement on OCC Community Reinvestment Act Announcement Press Release 08/28/18
Treasury Recommends ICBA-Advocated CRA Reforms NewsWatch Today Article 04/04/18

Letters to Congress

Title Recipient Date

Letters to Regulators

Title Recipient Date
OCC
11/19/2018
Treasury Department
01/22/2018

Testimonies

Title Committee Presenter Date