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Federal Reserve Board issues notice on ‘approach’ to modernizing CRA rules

This week, the Federal Reserve released an advance notice of proposed rulemaking for an “approach” to modernization of rules implementing the anti-redlining Community Reinvestment Act (CRA) following a vote from the board.

Earlier this week, the Federal Reserve Board voted unanimously during an open meeting to release an advance notice of proposed rulemaking for an “approach” to modernization of rules implementing the anti-redlining Community Reinvestment Act (CRA).

This approved noticed is referred to as the Advance Notice of Proposed Rulemaking (ANPR) and invites public comment on an approach to modernize the regulations that implement the CRA.

The approach is aimed at “strengthening, clarifying, and tailoring” the CRA rules to reflect the current banking landscape and better meet the core purpose of the underlying statute, said a Monday news release from the Board of Governors.

The Federal Reserve hopes for feedback on ways to evaluate how banks meet the needs of low- and medium-income communities, as well as address inequities in credit access for these communities.

“By releasing a thoughtful and balanced ANPR and providing a long period for comment, the Federal Reserve is hoping to build a foundation for the banking agencies to come together on a consistent approach to CRA that has the broad support of the intended beneficiaries as well as banks of different sizes and business models,” Federal Reserve Board Chair Jerome H. Powell said Monday.

Accord to the Monday release, public comment on the ANPR will assist the Board of Governors in refining CRA modernization proposals to:

  • Strengthen CRA’s core purpose of meeting the wide range of LMI banking needs and addressing inequities in financial services and credit access
  • Address changes in the banking industry
  • Promote financial inclusion by including special provisions for activities in Indian Country and underserved areas, and for investments in Minority Depository Institutions and Community Development Financial Institutions
  • Bring greater clarity, consistency, and transparency to performance evaluations that are tailored to local conditions
  • Tailor performance tests and assessments to account for differences in bank sizes and business models
  • Clarify and expand eligible CRA activities focused on LMI communities
  • Minimize data burden and tailor data collection and reporting requirements
  • Recognize the special circumstances of small banks in rural areas
  • Create a consistent regulatory approach