Modernizing the Community Reinvestment Act Opens the Door to Improve Access to Capital in Indian Country
Invitation to Comment on the Community Reinvestment Act
Bank regulators are working towards modernizing the Community Reinvestment Act (CRA), which was designed to encourage financial institutions to help meet the credit needs of their communities. An Advance Notice of Proposed Rulemaking (ANPR) released on the CRA gives tribal leaders and banks that serve Indian Country an opportunity to comment on enhancing the 41-year-old law.
The Office of the Comptroller of the Currency (OCC) has met with key stakeholders to discuss how the regulations can better achieve the statute's purpose. NAFOA had the opportunity to speak directly to the Comptroller of the Currency Joseph Otting on how changes to the CRA may impact tribal governments and their communities.
The current regulations are designed to evaluate a bank’s retail loans – with a heavy focus on homeownership, investments, and services to determine if the these services have been offered to its community. Mortgage transactions to individual tribal members located on a reservation are scarce, so the CRA could benefit from including other types of affordable loans that build credit and promote tribal member stability. Additionally, larger banks should receive credit if they invest in financial institutions and tribal government programs that are serving tribal community needs and promote economic growth.
After public comments are received and reviewed on the ANPR, a proposed rule will be the next step. Following a second round of comments there will be a final rule. NAFOA encourages tribal governments and the banking community to comment and stay engaged.
Comments on this ANPR will be accepted for 75 days after publication in the Federal Register.
Community Reinvestment Act Defined:
The CRA was enacted in 1977 to address “redlining,” a practice where banks would deny credit to individuals based on where they live. Today the law requires the federal banking regulators (the OCC, the Federal Reserve Board, and the Federal Deposit Insurance Corporation) to assess each depository institution’s record of helping meet the credit needs of the low and moderate income communities it is chartered to serve. Banks are subject to laws and regulations like the CRA in return for the privilege of deposit insurance protection and access to the Federal Reserve’s discount window.
If you have any questions or comments, please contact Jennifer Parisian at (202) 558-8040 or Jennifer@nafoa.org.