The National Housing Conference (NHC) applauds the final rule for the modernization of the Community Reinvestment Act (CRA). “The final rule is the product of years of work to bring CRA into the 21st century,” said David M. Dworkin, President and CEO, National Housing Conference. “This regulation is the result of more than a decade of consultations with community and banking groups and years of work by regulators to get it right. They got it right.” Dworkin continued, “While not everyone is going to like everything in the final rule, it succeeds in significantly improving the status quo, and leaves room for ongoing clarification and adjustment over a 24-month implementation period.”
Dworkin identified several areas where the final rule made significant changes to last year’s proposed rule, about which NHC had voiced significant concerns. “We are pleased to see that the final rule is responsive to these concerns and appreciate the regulators’ willingness to make necessary adjustments.” Areas NHC noted in its comment letter that have been addressed include the treatment of community development activities, the Low-Income Housing Tax Credit, and the degree to which banks might be disincentivized to seek an outstanding rating by the previous rule’s approach, among others.
One of the longstanding concerns with the existing CRA regime was the lack of transparency regarding which investments would qualify for CRA treatment. “Clarity and consistency are crucial, but they must be achieved thoughtfully to avoid unintended consequences,” Dworkin said. “The final rule effectively makes the process less opaque and can be further refined through the Q&A process and examiner guidance.”
“Although some regulators raised concerns about rushing the regulation’s implementation before the conclusion of the Biden Administration, those concerns were not warranted,” Dworkin said, noting that the 24-month implementation period, and broad support among the Federal Reserve Board of Governors, is “a clear indication that regulators have found the right balance, making the final rule durable and sustainable.”
NHC’s 2022 comment letter urged regulators to explicitly address the issue of race in the final rule. While the final rule avoided running afoul of recent Supreme Court decisions, it embraces earning CRA credit for Special Purpose Credit Programs (SPCPs), even when there is no nexus to income, opening doors for banks to engage in initiatives that promote racial equity, as SPCPs are explicitly allowed under the Equal Credit Opportunity Act.
NHC also supports the rule’s treatment of internet banking, an important advancement of the regulations that Dworkin said is fully consistent with the statute’s emphasis on branches. “I haven’t been into a physical bank branch in years, but I visit my bank’s app on my mobile phone every week to make deposits or withdrawals” Dworkin said. “The original statute in 1977 doesn’t require that branches be constructed out of bricks and steel. Branches today are often constructed out of ‘0s and 1s’ instead but serve the same purpose. My app is my branch, and the final regulation acknowledges this transformation, aligning the CRA with the 21st century.”
NHC looks forward to working with the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency to ensure a smooth and effective implementation of this pivotal rule.
Founded in 1931, the National Housing Conference is the oldest and broadest housing coalition in America. NHC is a diverse continuum of affordable housing stakeholders who convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest—an America where everyone is able to live in a quality, affordable home in a thriving community. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.