ABA requires modifications to CRA modernization proposition in declaration for record

Ahead of a House Financial Services subcommittee hearing on the joint firm proposition to upgrade the Community Reinvestment Act, the American Bankers Association warned legislators that particular elements of the proposition are not likely to achieve the objectives of regulative modernization, which “if not calibrated appropriately, the final rule could result in outcomes that are contrary to the agencies’ intent, particularly as it relates to expanding access to credit for residential mortgages, small-business loans and community development financing.”

ABA required firms to reassess one element of the proposition that would need big banks (which the proposition specifies as those with more than $2 billion in possessions) to define production of “retail lending assessment areas” where the bank has concentrations of house mortgage or small-business loans where it does not have a physical existence. Among other things, ABA kept in mind that the loan volumes that would set off a RLAA are “not sufficiently material,” and might inadvertently incentivize banks to “curtail retail lending in locations that are incidental to the bank’s business strategy and where the bank does not actively market its loan products.”

The association even more suggested that regulators reassess the proposed criteria and score approach; offer an appropriate shift duration once the guideline is settled; and provide extra time for the market to offer feedback on the proposition. ABA likewise stressed that cooperative credit union and other nonbank monetary companies must go through CRA-like requirements.


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