The Community Reinvestment Act is essential to communities across the nation. Through CRA, financial services have been made available to many places that might otherwise be overlooked. In spring 2022 the three federal agencies that regulate banks and other lenders – the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation – jointly issued a proposed new CRA rule. This proposal, and the many efforts which will follow, are critically important to ensure not only that current CRA-related activities and investments continue but that they expand to reach populations and communities for which access to affordable finance is still elusive.

This is especially important in rural communities across the country as many are considered high credit need areas. CRA modernization will help incentivize more lending in these areas and increase community development activities. As rural communities continue to change, the CRA must adjust as well to reflect modern lending practices. The proposed rule has the potential to further increase lending in high need rural areas, but HAC has a number of recommendations to optimize CRA’s impact.

HAC believes a final rule could further increase CRA’s impact on underserved rural communities if it:

1. includes activities in rural communities as an additional impact factor, informed by the most precise, density-based definitions already used by policymakers and the research community;
2. ensures uniform treatment of all CDFIs and supports the most transformative CDFI activities in underserved rural communities;
3. modifies the definition of affordable housing to enable housing providers to respond effectively to the unique income demographics and constraints on government capacity of rural communities;
4. clarifies how consequential the impact factors can be for a bank’s community development test performance and overall rating; and
5. prevents banks with a substantial number of rural assessment areas from “gaming” the NPR’s performance benchmarks under the retail lending test.

To learn more about HAC’s full recommendations, read our full comment letter.

Other comments submitted to OCC are posted online and can be reviewed here.