Request for comments on proposed revisions to regulations implementing the Community Reinvestment Act.The Federal Reserve Board invited public comment on February February: see month. 25, 2005, on proposed revisions to its regulations implementing the Community Reinvestment Act Community Reinvestment Act (CRA) Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. (CRA See Community Reinvestment Act. ) that are intended to reduce regulatory burden on community banks while making CRA evaluations more effective in encouraging banks to meet community development needs. The Board's notice of proposed rulemaking A notice of proposed rulemaking or NPRM is issued by law when a regulatory agency of the United States Federal Government wishes to add, remove, or change a rule (or regulation) as part of the rulemaking process. Outside the USA. is identical to proposals approved by the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. and the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. on February 22, 2005. The proposal would introduce the following: * Exempt banks with assets between $250 million and $1 billion, referred to as intermediate-small banks, from the data reporting obligations the current CRA regulations imposed on banks with assets larger than $250 million. * Subject intermediate small banks to a two-part Adj. 1. two-part - involving two parts or elements; "a bipartite document"; "a two-way treaty" bipartite, two-way many-sided, multilateral - having many parts or sides test (retail lending and community development) instead of the current three-part test (lending, investment, and service). For intermediate-small banks, a satisfactory community development rating, as well as a satisfactory retail lending rating, would be necessary for an overall rating of "satisfactory." * Revise the definition of community development for all banks of any size to make it more responsive to the community development needs of rural areas. * Clarify when illegal lending practices--for example, by a bank's affiliate--might reduce the bank's CRA rating. The proposal addresses concerns expressed by the Board in July 2004 when it withdrew a February 2004 proposal to raise the small-bank threshold to $500 million. The Board expressed concern in July that the proposal was not certain to yield significant cost savings for banks, but might reduce community development capital in some rural communities. The current proposal would deliver greater cost savings while maintaining scrutiny of banks' community development records, though on a more flexible basis. The proposal would also refine the definition of community development in rural areas to make the regulations more effective in encouraging rural development. |
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