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Community Reinvestment Act Notice of Proposed Rulemaking Published

David Weber, PHADA Policy Analyst

On December 12, 2019, the Office of the Controller of the Currency (a part of the Department of the Treasury) and the Federal Deposit Insurance Corporation issued a Joint Notice of Proposed Rulemaking and request for comment on proposed regulations implementing the Community Reinvestment Act. Comments will be due 60 days after the notice is published in the Federal Register, which had not yet occurred as of press time. The Federal Reserve Board (the Fed) also has authority in enforcing the Community Reinvestment Act but has not joined this proposed rulemaking. Some reports indicate that the Fed will issue its own proposed rules in the coming months.

 

Background

Originally passed in 1977 the Community Reinvestment Act (CRA) was a follow-up to the Home Mortgage Disclosure Act (HMDA) or 1975. The acts were designed to prevent and reverse redlining and racial discrimination in the availability of financial credit in home and small business lending. The HMDA requires banks to make public information on home mortgages they issued. The CRA requires that banks make loans and banking services available to the people and businesses in the neighborhoods where they take deposits and to make investments in low income neighborhoods. The HMDA enabled public interest and advocacy groups to document what banks were, or were not, doing in mortgage lending. Neighborhood organizations were then able to use this data to leverage support from banks for a variety of community investments, targeted banking services, and loan programs. Banks addressing these concerns would then receive positive points on assessments of their CRA compliance.

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