CRA

If policymakers are serious about revitalizing low-income communities, they should require all fintechs and other nonchartered lenders to adhere to the Community Reinvestment Act.

For the second time in three years, the Cleveland thrift has received a low score on its Community Reinvestment Act examination for making too few home loans in low-income communities.

During the Trump era, the bank regulators couldn’t see eye to eye on how to modernize the Community Reinvestment Act. But a looming leadership change atop the Office of the Comptroller of the Currency is boosting optimism that they can harmonize their approaches.

Federal Reserve Chair Jerome Powell said bank regulators still aim to write a universal rule updating the Community Reinvestment Act, despite years of disagreement between the agencies on how to proceed.

Lost in the debate about whether to make fintechs comply with the Community Reinvestment Act is that many of them already partner with banks to make loans in low-income neighborhoods.

If policymakers are serious about revitalizing low-income communities, they should require all fintechs and other nonchartered lenders to adhere to the Community Reinvestment Act.

The five-year pledge, tied to the company's pending acquisition of CIT Group, earmarks nearly $6 billion for small-business lending and $3.2 billion for affordable housing.

The Boston-based bank said the Office of the Comptroller of the Currency gave it the highest grade possible on its most recent Community Reinvestment Act examination. Santander had received a “needs to improve” grade in 2017 and a “satisfactory” rating in 2018.

President Biden’s executive order requiring agencies to weigh the impact of pending policies on underserved groups could have a lasting effect on issues from reforming the Community Reinvestment Act to fair lending.

The next administration must halt the practice of allowing new entrants into the banking system to forgo a full Community Reinvestment Act exam.