Policy News field

HAC Submits Community Reinvestment Act Comments

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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.

Policy News from the Administration

HAC Applauds OCC Rescinding 2020 CRA Rule

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HAC submitted comments in response to the Office of the Comptroller of the Currency’s (OCC) proposal to rescind its June 2020 Community Reinvestment Act (CRA) rule. HAC applauds the OCC’s move to rescind and replace this rule, and we look forward to working together in the future to improve and modernize the CRA in a way that equitably serves rural places. To explore HAC’s 2016 CRA research series, “The Community Reinvestment Act in Rural America,” click here [https://ruralhome.org/rural-cra-resources/].

Key takeaways:

  • Support the CRA

    HAC unequivocally supports the Community Reinvestment Act

  • Opposed June 2020 Rule

    For numerous reasons, HAC did not support the OCC’s June 2020 rule and is glad to see this proposed rescinding

  • CRA Modernization

    OCC should work together with the Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation (FDIC) to thoughtfully modernize CRA

  • Promote Equity

    Any CRA modernizations should seek to equitably serves rural places

HAC OCC CRA Rule Rescinded Comment
Policy News from Congress

HAC Weighs In on The Federal Reserve’s CRA Plan

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The Community Reinvestment Act (CRA) is vitally important to communities across the nation. Through CRA, financial services have been made available to many neighborhoods that would otherwise be overlooked. In speaking of the importance of the CRA, Chairman Powell said, “The CRA plays a vital role in supporting economic opportunity in low-income and minority communities, in both rural and urban areas, and is a top priority for the Federal Reserve.”

The Housing Assistance Council responded to the Federal Reserve System’s Advanced Notice of Proposed Rulemaking on the Community Reinvestment Act to lend our voice to the process and help ensure rural community concerns are included in the discussion. HAC’s comments in response to the ANPR are focused on making sure CRA fulfills its yet unrealized potential in rural communities currently, and in any modernization effort.

HAC’s Response to CRA Modernization Plan

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The Housing Assistance Council submitted comments to the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) on their proposal to modernize the Community Reinvestment Act.

For numerous reasons, The Housing Assistance Council does not support the OCC and FDIC’s proposal. HAC appreciates efforts and ideas in the plan to improve CRA’s reach and effectiveness in rural communities. These proposed improvements, however, are far outweighed by a considerable number of ill-conceived and unsubstantiated aspects of the plan that run counter to the intent, value, and effectiveness of CRA. Furthermore, the Housing Assistance Council is disappointed that the OCC and FDIC did not include the Federal Reserve as part of this proposal. Uniform implementation and oversight is critical for an effort as far reaching and important as CRA. Additionally, with the health and economic catastrophe created by the COVID-19 pandemic, there should be an indefinite suspension of the CRA comment period. The comment period deadline, which was initially proposed for only 60 days, should have been at least 120 days even under the best of circumstances.

The Housing Assistance Council unequivocally supports the Community Reinvestment Act and what it stands for. In any effort to modernize or modify CRA, it is imperative to fully consider the impact of those modifications and to ensure that CRA continues to build upon its unparalleled legacy of expanding access to financial products and services. HAC believes CRA can be modernized and improved, but it is important to acknowledge that CRA has been responsible for more than $1.5 trillion in capital investments to underserved communities. Without CRA, many communities would lack access to capital, revitalization efforts would have not occurred, and disinvestment would be more common. CRA should build upon its established platform for improving communities’ access to credit, not jeopardize the ethos, intent, and effectiveness of this vital institution.

HAC Shares Comments on OCC's "Reforming the Community Reinvestment Act Regulatory Framework" ANPR

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The Housing Assistance Council (HAC) is presenting its comments to the Office of the Comptroller of Currency (OCC) on its “Reforming the Community Reinvestment Act Regulatory Framework” Advanced Notice of Proposed Rulemaking (ANPR). Through this ANPR, the OCC is seeking stakeholder comments on avenues to modernize CRA and increase lending and investment where it is needed most, reduce reporting burden, and assess performance, all in a manner consistent with the statute’s original purpose. Given its organizational focus on rural housing, HAC has prioritized its remarks related to questions and issues that most impact rural communities and consumers. 

Download HAC’s Comments: PDF

Materials Posted: Proposed Changes to CRA – What Does It Mean for Rural America?

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Materials Posted

PowerPoint Presentation | Webinar Recording | HAC Reports on CRA in Rural America

The Office of the Comptroller of the Currency (OCC) recently issued a call for input on its regulations implementing the Community Reinvestment Act, which requires banks to help meet the credit needs of the communities they serve. OCC’s notice says it is building a new framework to transform and modernize its CRA rules.

Please Join the Housing Assistance Council (HAC) for an overview of the proposed changes and a discussion on how rural communities can weigh in on the proposal.

HAC's Analysis of CRA in Rural America

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HAC Provides Analysis of CRA in Rural America

The Housing Assistance Council is pleased to present a series to resources related to the Community Reinvestment Act (CRA) and its application in Rural America. The Community Reinvestment Act (CRA), adopted in 1977, requires federally-insured depository institutions to help meet the credit needs of their entire communities, including low- and moderate-income neighborhoods. Assessments of CRA’s scope and effectiveness are typically conducted at a market-specific level, and those markets analyzed are almost exclusively metropolitan or urban in nature. Very little is known about the implementation of CRA in the rural context.

Reports

alt CRA in Rural America:The Housing Assistance Council (HAC) conducted a general assessment to provide a better understanding of CRA’s implementation in rural communities. The report focuses on mortgage lending and CRA.
alt Making CRA Work in Rural America: Partnerships and Opportunities for Rural Community Reinvestment This report serves to increase our knowledge of how CRA can work in rural areas by focusing on four successful rural community development projects. The case studies in this report explore a preschool expansion in Maine, construction of rental housing for farmworkers in Colorado, construction of low- and moderate income housing in Minnesota, and the donation of a bank branch to a local credit union in Mississippi.
alt Making CRA Work in Rural America: Finding “Outstanding” Financial Institutions This report takes a closer look at lenders who consistently excel in meeting their CRA obligations. Is this a common phenomenon? Are there things which these lenders have in common? This research begins a discussion about how we can learn from those lenders which already do an outstanding job of providing credit to all of their service areas.

“The CRA will make a good project better, but not a bad project good”
– Greg Hohlen, Bremer Bank

CRA Webinar Series

alt CRA in Rural America: The Housing Assistance Council (HAC) conducted a general assessment to provide a better understanding of CRA’s implementation in rural communities. The report focuses on mortgage lending and CRA.
alt CRA Investments in Rural Communities: Successful Uses: This webinar explores two successful rural development projects that earned CRA credit for the lenders involved. The discussion includes parties involved with a preschool project. In each case, the participants will briefly describe the CRA’s role in their project.
alt CRA in Rural America Part III: Investments in Rural Communities: This webinar examines CRA rated outstanding lenders. The webinar includes an evaluation of lenders that consistently earn CRA outstanding ratings. The presentation identify consistently rated outstanding lenders, describe their characteristics, and identify key aspects that are related to their outstanding performance. The webinar includes a panel to discuss the CRA and rural communities.

Materials Posted: CRA Investments in Rural Communities: Successful Uses

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Materials Posted

Introduction | Presentation | Recording | Report

This webinar, the second in a series of three, will explore two successful rural development projects that earned CRA credit for the lenders involved. The discussion will include parties involved with a farmworker housing and a preschool project. In each case, the participants will briefly describe the CRA’s role in their project. The participants will also, in a discussion panel format, note challenges related to the CRA in rural communities and how these challenges can potentially be addressed to develop a successful project.

The CRA is implemented by the three federal bank regulators through periodic lender examinations of all Federally insured depository institutions. These CRA examinations vary in occurrence and detail based on lender asset size with small lenders being evaluated less frequently (usually, once every five years) and less thoroughly (one test area instead of the three applied to large banks). Upon completion of the examination, regulators’ award banks ratings based on their compliance with the CRA. Regulators can then use a poor rating to deny lender applications for such things as opening a new office or acquiring another bank.

In complying with the CRA requirements banks in turn need to ensure they make their services available to all parts of their service areas. In some cases this means providing assistance to local community development projects, through loans, grants, etc., for which they lender can earn credit as fulfilling their CRA obligation when they are evaluated. The degree to which this occurs in rural communities is limited and there is the potential for more.

This webinar, the second in a series of three, will explore two successful rural development projects that earned CRA credit for the lenders involved. The discussion will include parties involved with a farmworker housing and a preschool project. In each case, the participants will briefly describe the CRA’s role in their project. The participants will also, in a discussion panel format, note challenges related to the CRA in rural communities and how these challenges can potentially be addressed to develop a successful project.

CRA in Rural America (Webinar)

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Materials Posted

Introduction | Power Point Presentation | Recording

The Community Reinvestment Act (CRA), enacted in 1977, requires federally insured depository institutions to help meet the credit needs of their entire service area, particularly those low- and moderate income, economically distressed, and geographically isolated areas, in a manner that is consistent with safe and sound operation. The CRA, originally created as a response to discriminatory lending practices which primarily affected urban areas, is rarely discussed from a rural perspective despite the fact that the CRA evaluates all depository institutions.

The CRA is implemented by the four federal bank regulators through periodic lender examinations of all Federally insured depository institutions. These CRA examinations vary in occurrence and detail based on lender asset size with small lenders being evaluated less frequently (usually, once every five years) and less thoroughly (one test area instead of the three applied to large banks). Upon completion of the examination, regulators’ award banks ratings based on their compliance with the CRA. Regulators can then use a poor rating to deny lender applications for such things as opening a new office or acquiring another bank.

During the CRA examination process, the public is able to provide regulators with information regarding lender activities including any potential problems they may believe are occurring. In complying with the CRA requirements banks in turn need to ensure they make their services available to all parts of their service areas. These both make opportunities for involvement by non-profits in the process to help their local communities.

This webinar, the first in a series of three, will provide an overview of the CRA and how it touches rural communities. The discussion will include a brief review of rural banking trends, a description of the CRA process, and an accounting of CRA oversight involving rural lenders and lending activity. Despite being thought of as a policy that primarily impacts urban/suburban communities, a majority of CRA evaluated lenders are small-asset, rural-headquartered institutions. This session will describe how the CRA relates to these and other lenders who serve rural communities.

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