Back last year the Office of Thrift Supervison (OTS) and the FDIC proposed doing serious harm to the Community Reinvestment Act (CRA) by offering a proposed regulation that would have made thrifts and banks in the $250 to $1 billion size range subject to a simplified CRA exam rather than the current three part exam which measures lending, service and investment.
Because certain bank applications such as mergers and acquisitions are subject to a community reinvestment review, community organizers have been able to use the regulatory process to press banks to do more lending, provide more branches and more investments in low and moderate income communities.
Community activists led by the National Community Reinvestment Coalition responded with a torrent of letters objecting to this proposed change. The FDIC received over 11,000 comments and that has apparently caused them to re-think their approach.
Today the FDIC and the Office of the Comptroller of the Currency OCC announced a
new proposal which would still provide some CRA simplification for banks in the $250 million to $1 billion range, but also requires them to pay active attention to the community development needs of low and moderate income communities by making 50% of their total CRA score dependent on this community development test.
The full proposal has some negative elements as well as some positive elements that community activists will be debating in the coming weeks, however, we can give ourselves a hand for forcing the FDIC to stop and re-think their efforts to harm the CRA even though they have a Republican Administration and Congress to back them up.
Your comments on this new proposal will be solicited in the coming weeks as community activists have an opportunity to fully analyze this new proposal.