Agencies Float Update to CRA Guidelines

WASHINGTON — The federal bank regulators on Monday proposed several revisions to their guidance for complying with Community Reinvestment Act regulations.

The proposed changes would add further details to how banks can earn CRA credit through various means, including community development activities outside of a bank's immediate assessment area, community services offered to low- and moderate-income individuals and investments in other organizations with a community development purpose, among other changes.

The proposal, which banks and other members of the public will have 60 days to comment on, would revise a set of interagency "questions and answers" about CRA intended to help guide institutions through complying with the law. The regulators drafted the proposal after receiving public comments about needed updates to the document. The last revision was in March 2010.

"In accordance with their statutory responsibilities, the agencies regularly review examination policies, procedures and guidance to better serve the goals of the CRA," the agencies said. (The proposal was released by the Federal Deposit Insurance Corp., the Federal Reserve Board and the Office of the Comptroller of the Currency.)

Among other changes, the proposal would provide further clarification about the possibility for a bank to earn CRA credit for community development activities carried out in a broader regional or statewide market, as long as that market includes the immediate area where the bank is assessed for CRA compliance.

The revised document would also include additional detail about how owning stakes in nationwide investment funds can earn a bank CRA consideration, and what circumstances would result in a bank meeting community development obligations if one of its executives was a board member for a community development organization.

The regulators also proposed adding two new questions. One would deal with permitted investments in organizations that are only partially used for community development reasons. The other question would clarify how examiners assess community development loans in CRA lending tests that apply to large institutions. "A number of commenters asserted that community development activities are undervalued," the proposal said.