‘Now is not the time to divert any of our nation’s resources away from the urgent task at hand’
On April 8, the National Housing Conference (NHC) submitted comments in response to the Federal Deposit Insurance Corp. (FDIC)’s and the Office of the Comptroller of the Currency (OCC)’s Notice of Proposed Rulemaking (NPR) on Community Reinvestment Act (CRA) regulations.
NHC previously expressed concern the original 60-day comment period was not long enough to provide constructive and specific recommendations for how CRA modernization can be successful. We were pleased to see the comment period extended to April 8. But now, given the growing COVID-19 crisis, the housing and banking industry is bracing for the severe impact of the pandemic on our economy, the financial system and communities throughout the nation. NHC strongly recommends an immediate suspension of all regulatory processes involving housing and financial services that do not directly contribute to the war against the COVID-19 virus and its economic aftermath.
“Although CRA regulatory action is important to better serve communities throughout the nation and adapt to an evolved banking industry, now is not the time to divert any of our nation’s resources away from the urgent task at hand—combating COVID-19,” said NHC President and CEO David M. Dworkin.
NHC has stressed CRA modernization needs to occur, and it needs to include improved clarity, consistency and flexibility, including metrics that are transparent and fair. Any CRA new regime must:
- Increase investment in communities that are currently underserved;
- Benefit more low- and moderate-income (LMI) people, particularly people of color, who live in those communities;
- Ensure that CRA lending and investment does not lead to displacement of the very people it is meant to help; and
- Make both bank performance and government enforcement more transparent and predictable.
In the letter, NHC points out as the NPR stands, the proposed rule fails to adequately address any of these four objectives. Instead, it will likely reduce the number of investments in underserved communities, harm low- and moderate-income people, and make both bank performance and government enforcement less transparent and predictable—the exact opposite of the regulators stated intention.
NHC has expressed concern in five key areas of the current NPR that include Assessment Areas, Qualifying Criteria Activities and Performance Metrics. In the area of performance metrics, the CRA Evaluation Measure (CRA-EM) proposed in the NPR would be the predominate basis for a bank’s presumptive CRA rating. It is a ratio in which the numerator is the annual dollar volume of a bank’s total CRA qualified activity on the bank’s balance sheet and the denominator is the bank’s domestic retail deposits with certain adjustments. Adoption of the NPR’s CRA-EM would lead to a wide range of unintended consequences that would have the collective impact of gutting CRA.
“CRA modernization is a once-in-a-generation opportunity, and we applaud the diligent work that has already been done as well as the sincere commitment by all participants to improving this important legislation. CRA modernization is certainly worth pursuing, but it’s worth waiting for,” said Dworkin.
About NHC: The National Housing Conference has been defending the American Home since 1931. Everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. NHC convenes and collaborates with our diverse membership and the broader housing and community development sectors to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.