It has been years since the federal financial institution regulatory agencies have overhauled the Community Reinvestment Act regulations, but they are working on a total revision right now. And they are constantly tinkering with the rules. The agencies use the CRA regulations to advance social policy. The changes impact how your rating is determined and what activities receive community development credit.
Bankers should view CRA ratings as a game. They need to learn how to play the game well. The challenge of playing the game well is made more difficult as the agencies keep changing the rules of the game.
Recent revisions generally involve the identification of activities that may improve a financial institution’s CRA rating. A high level of participation may improve your rating. No participation may hurt your rating. You must learn how to play the CRA rating game according to the new rules.
Recent revisions include:
Low-cost education loans to low-income borrowers;
Ventures with minority- and women-owned financial institutions and low-income credit unions; and
Eligible development activities in areas designated under the Neighborhood Stabilization Program administered by HUD.
Click on each of the changes to obtain all of the details on the change.[add links to each of the above]
During 2010 the agencies held multiple public hearing exploring the topic of CRA revisions. The hearings explored whether and how the agencies should revise the CRA regulations.
In my experience when the agencies hold hearing such as these, the issue of whether to make changes and the content of changes has already been decided. The hearings soften up the market for the changes to follow and allow the agencies to judge how much resistance to expect.
Look for major changes to CRA in the next year.