ABA and BPI caution against CRA rule changes

Ladies and Gentlemen:

The Bank Policy Institute and the American Bankers Association write regarding the federal banking agencies' notice of proposed rulemaking to revise their regulations under the Community Reinvestment Act. Two recent developments threaten to upend how banks design programs to ensure CRA compliance, and we respectfully submit that the agencies must not adopt final CRA rules until the ultimate outcome of these events is clear.

First, the banking agencies recently proposed regulations that would substantially increase capital requirements for larger banks in ways that will materially affect key activities underpinning these banks' CRA programs, leading to reduced credit availability and economic growth. Second, the U.S. District Court for the Southern District of Texas recently enjoined the CFPB from implementing or enforcing its new Section 1071 small business lending data collection rule until the Supreme Court rules on a constitutional challenge to the CFPB's funding structure. The injunction will, at a minimum, delay many banks' 1071 data collection and reporting by as much as 10 months. The CRA proposal anticipates using the data collected under Section 1071 in various ways to assess CRA compliance.

ABA and BPI support the longstanding goals of the CRA to promote and advance economic opportunity by encouraging banks to provide loans, investments, and services broadly across the communities they serve, including low- and moderate-income areas. We also support efforts to modernize the CRA regulatory framework to ensure that the CRA remains an effective mechanism for sustaining and revitalizing communities.

However, as described below, we do not believe that the agencies or the public fully understand the impacts that the proposed capital changes would have on banks' CRA programs, which must be considered, both by the agencies and the public, before any new CRA rules are finalized. The agencies should consider whether changes to the CRA proposal are warranted in light of the proposed changes to the capital rules, and, if so, the agencies must seek comment on any such changes. Should the agencies finalize the CRA rules before the capital rules are finalized, the agencies will not have provided the public with a meaningful opportunity to comment on the proposed CRA amendments in light of the changes banks are likely to make to their CRA programs due to revisions to the capital rules. We also believe that the agencies should not finalize the CRA rules until the Supreme Court determines the constitutionality of the CFPB’s funding structure and the implications of that decision on the implementation of new CRA rule are understood.

Download the joint comment letter to read the full text.