"Examining the Unified Proposed Rule to Modernize the Community Reinvestment Act."

Chairman Waters, Ranking Member McHenry, and distinguished Members of the Committee, the American Bankers Association (ABA) appreciates the opportunity to submit this statement for the record for today’s hearing examining the interagency proposed rule to modernize the regulations that implement the Community Reinvestment Act (CRA). Importantly, we are still in the process of analyzing the proposal and discussing its potential impacts with our member banks. As such, the observations and recommendations contained in this Statement for the Record may be subject to refinement or change.

Access to capital is fundamental to economic opportunity in the United States. For this reason, banks support the CRA statute’s objective of encouraging banks “to help meet the credit needs of the local communities in which they are chartered, consistent with the safe and sound operation of such institutions.” In fact, in 2020, banks provided more than $271 billion in capital to low- and moderate-income (LMI) communities.

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 consensus that the banking agencies need to ensure that CRA expectations are transparent and that examiners interpret and apply CRA regulations consistently. And, there is wide recognition that CRA activities can do more to financially empower underserved consumers and communities.

We support each of these objectives, and we anticipate that several aspects of the proposed rule would achieve them. However, we are concerned that other elements of the proposal would not accomplish the goals of regulatory modernization. In fact, if not calibrated appropriately, the final rule could result in outcomes that are contrary to the agencies’ intent, particularly as it relates to expanding access to credit for residential mortgages, small business loans, and community development financing.

Nevertheless, we remain optimistic that it is possible to improve the effectiveness and administration of the CRA in a manner that will help banks more effectively support customers and communities. To that end, we offer the following initial observations and recommendations, which reflect the perspective of the full range of bank business models.

Download the statement to read the full text.