Category Archives:Community Reinvestment Act

Agencies Request Comment on Community Reinvestment

The OCC, Board of Governors, and FDIC (the Agencies) invited public comment today to clarify and supplement their Interagency Questions and Answers Regarding Community Reinvestment to address issues raised by bankers, community organizations, and others regarding the Agencies’ Community Reinvestment Act (CRA) regulations. The document provides additional guidance to financial institutions and the public on the agencies’ regulations that implement the Community Reinvestment Act (CRA). Among other things, the proposed new and revised CRA questions and answers address community development-related issues by clarifying guidance on economic development; providing examples of community development loans and activities that are considered to revitalize or stabilize an underserved nonmetropolitan middle-income geography; and clarifying how community development services are evaluated.

Agencies Announce Areas for CRA Consideration

Federal Agencies today announced the availability of the 2014 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as “community development.” “Distressed nonmetropolitan middle-income geographies” and “underserved nonmetropolitan middle-income geographies” are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council (FFIEC) website. The designations continue to reflect local economic conditions, including triggers such as unemployment, poverty, and population changes. As with past releases, the agencies incorporate a one-year lag period for geographies that are no longer designated as distressed or underserved in the current release. Geographies subject to this one-year lag period are eligible to receive consideration for community development activities for 12 months after publication of the current list. The current and previous years’ lists can be found on the FFIEC website, along with information about the data sources used to generate those lists.”

Payday Loan Alternatives

On April 1st at the 2014 National Interagency Community Reinvestment Conference, Comptroller Thomas Curry delivered remarks to all attendees. He began his remarks by identifying key objectives in the interagency’s effort to update and modernize the CRA process by aligning the agencies’ approaches to CRA evaluations, improving evaluation procedures, and providing effective training that prepares examiners to develop well-supported CRA evaluations.

Next, he discussed an issue that has received a lot of focus and concerns with the OCC, high cost payday loans. In 2000, the OCC issued an advisory letter to banks warning about the compliance, legal, and reputation risk associated with payday lending. While the Comptroller applauded banks for providing loan products to consumers with strong credit histories; he defended his agency’s guidance on deposit advance products and stated that “properly managed small-dollar loan programs do not exhibit the same level of risks we identified with deposit advance products, and that such loans can be made available to consumers.” He added that they understand the challenges presented by small-dollar consumer lending. Specifically, banks have told the OCC that the underwriting processes need to be streamlined to make such products viable. However, the OCC determined that many of the risks identified with regard to deposit advance guidance, including the product’s short-term balloon payment feature, were specific to that product. He encouraged banks to offer small-dollar loan products with reasonable loan terms that can put consumers on a path toward a brighter credit future. In addition, he believes such programs can :

  • be offered at a low cost to banks;
  • help build a banks’ reputation;
  • expand existing customer relationships; and
  • potentially be elegible for positive CRA consideration.

In closing the Comptroller reiterated the OCC’s commitment to helping consumers by encouraging banks to offer reasonable loan products in a safe, sound, and responsible manner. “Properly structured small-dollar loans can offer borrowers a safe and affordable path, as opposed to high-cost loans that can lead to a cycle of debt. When consumers are able to reduce their dependence on short-term financial expedients, they benefit, banks benefit, and the economy benefits.”

FDIC's List of Banks Examined for CRA Compliance

FDIC today issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in October 2013. A consolidated list of all state nonmember banks whose evaluations have been made publicly available since July 1, 1990, including the rating for each bank, can be obtained from the FDIC’s Public Information Center at A copy of an individual bank’s CRA evaluation is available directly from the bank, which is required by law to make the material available upon request, or from the FDIC’s Public Information Center.  More on 2014 CRA Evaluations

Federal Banking Agencies Statement on Supervisory Approach to Originating Qualified Mortgages

The FDIC, OCC, NCUA and FRB issued an interagency statement on the supervisory approach to originating qualified mortgages under the CFPB’s ability-to-repay and qualified mortgage rule. The statement is intended to clarify supervisory expectations under the Community Reinvestment Act and safety-and-soundness requirements for supervised institutions. Under the CFPB’s rule, there is a presumption of compliance with the ability-to-repay requirements for loans that meet the definition of a “qualified mortgage.” The agencies noted that supervised institutions that originate both qualified mortgages and loans that do not meet the definition of qualified mortgage based on “business strategies and risk appetites” will not be subject to safety-and-soundness criticism based solely on the loan’s status as a qualified mortgage or a non-qualified mortgage. They also noted that the CRA and the rules are compatible, and that they do not believe that an institution’s decision to originate only or predominately qualified mortgages, “absent other factors,” would adversely affect the institution’s CRA evaluations.

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Financing Business Development, Expansion in Rural USA

The Office of the Comptroller of the Currency (OCC) today published the latest edition of its Community Developments Investments electronic newsletter entitled “Financing Business Development and Expansion in Rural America.” The newsletter provides an in-depth look at how banks are helping rural businesses grow and presents examples of banks helping to finance projects that expand manufacturing and bring services, goods, and jobs to rural communities.  The newsletter also discusses the recent changes to the Interagency Community Reinvestment Act Questions and Answers that will provide banks greater flexibility to serve rural communities that are outside their assessment areas, but are in the broader statewide or regional area that includes their assessment areas. “Banks and thrifts are stretching their financing capacity and reducing their risks by partnering with government agency programs,” said Comptroller of the Currency Thomas J. Curry. “Together, they are meeting community and business needs.”

November 2013 Newsletter