Two current policy advancements might basically change banks’ Community Reinvestment Act programs, and policymakers must prevent settling proposed modifications to the CRA guidelines till these problems are fixed, the American Bankers Association and the Bank Policy Institute stated the other day in a joint letter to federal banking regulators. The initially is a proposition by regulators to considerably raise capital requirements for big and midsize banks. The 2nd issues a current federal court order relating to a CFPB guideline carrying out Section 1071 of the Dodd-Frank Act, with a Texas judge remaining application of the guideline for ABA and Texas Bankers Association member banks till the U.S. Supreme Court picks the constitutionality of the bureau’s financing structure.
The proposed capital requirements would straight weaken bank loaning efforts associated with the CRA, ABA and BPI stated. “We do not believe that the agencies or the public fully understand the impacts that the proposed capital changes would have on banks’ CRA programs, which must be considered, both by the agencies and the public, before any new CRA rules are finalized. The agencies should consider whether changes to the CRA proposal are warranted in light of the proposed changes to the capital rules, and, if so, the agencies must seek comment on any such changes.”
The stay of small-business loaning guideline will postpone the facility of criteria for small-business loaning without the complete 1071 information set, the associations stated. As an outcome, the companies will not have the information they require to totally execute the CRA proposition as meant. “The possible impact of the 1071 litigation on CRA modernization is one more reason that the agencies should refrain from finalizing the CRA rules until that impact is understood,” they stated.