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Fed Issues ANPR on CRA Modernization

Fed Issues ANPR on CRA Modernization

Posted: Sep 30 2020
The Federal Reserve has released an advance notice of proposed rulemaking (ANPR) to solicit public input on updates to the central bank’s implementing regulations for the Community Reinvestment Act.  The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a CRA modernization proposal last year and the OCC released a final rule in May without the FDIC. 

The ANPR asks for public comments on several issues, including how CRA can more effectively meet the needs of low-to-moderate-income communities and address disparities in credit access; increase the clarity, consistency and transparency of supervisory expectations; and tailoring CRA supervision based on size, business model, and local market conditions.  In addition, the Fed is considering ways to reduce the burden of data collection while updating CRA standards to reflect changes in the delivery of banking services.  The ANPR also explicitly recognizes that CRA and fair lending responsibilities are mutually reinforcing.

The Fed envisions implementing a retail test consisting of a retail lending subtest and a retail services subtest and a community development test consisting of a community development financing subtest and a community development services subtest.  Smaller banks could choose to be examined under the existing CRA rules or be subject to the retail lending subtest.  Evaluation under the community development financing subtest would be optional for this group of institutions, which the proposal notes would be under $1 billion or $750 million in assets.

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