Letter to FRB on the ANPR re: CRA Modernization

Ann E. Misback
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

Ladies and Gentlemen:

The American Bankers Association is pleased to comment on the Advance Notice of Proposed Rulemaking (ANPR) issued by the Board of Governors of the Federal Reserve System (Federal Reserve) that would modernize the regulations that implement the Community Reinvestment Act of 1977 (CRA).

Banks care deeply about the vibrancy and vitality of their communities, and they support the goals of the CRA statute. In fact, banks provide more than $100 billion in capital each year to low- and moderate-income (LMI) communities. Banks also supply financial products and services that provide important economic opportunities for individuals, families, and small business owners.

Unfortunately, outdated implementing regulations undermine the CRA’s objectives. For several years, there has been broad, bipartisan agreement among policymakers, bankers, and consumer and community advocates that the CRA regulatory framework needs to be updated to reflect how technology has transformed the delivery of financial products and services. There is also wide recognition that CRA can do more to enhance economic opportunity for underserved consumers and communities. And, there is consensus that the banking agencies need to ensure that CRA expectations are transparent and that examiners interpret and apply CRA
regulations consistently.

The convergence of these factors provides an unprecedented opportunity to improve the CRA framework. Doing so will be challenging; the needs of communities vary widely, bank business models are not monolithic, and technology has forever changed consumer preferences for accessing financial products and services. These are complex issues that will require fresh thinking by all CRA stakeholders. Yet, we remain optimistic that it is possible to improve the effectiveness and administration of the CRA in a manner that will enable banks to more effectively support the communities and consumers they serve.

To that end, we offer the following comments, observations, and recommendations, which reflect the perspective of the full range of bank business models, asset sizes, and geographic locations.

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