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Over the past six months, the community development world has been in a state of agitation as two supervisory agencies, the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC), made or considered changes to the regulations governing Community Reinvestment Act (CRA) compliance for banks and thrifts, and two agencies — the Federal Reserve and the Office of the Comptroller of the Currency (OCC) — remained silent. The review of CRA, which started in July 2001, has undergone some interesting twists and turns, particularly because the four agencies, which normally stand together, were divided over how (or if) to change the regulations.
But now, three of the four have agreed to a common proposal. While the OTS adopted its changes last summer, the FDIC, the OCC, and the Federal Reserve Board agreed to new proposed regulations. They will have been posted in the Federal Register and the public has until May 10 to comment on the proposed changes.
Here is the essence of the issue and the proposed changes. The primary problem is that banks and thrifts in the $250 million to $1 billion category feel that they cannot compete on CRA with the large banks and, therefore, regulating them in the same manner is unfair and overly burdensome. Community developers feel that these midsize banks should not be held to the simple lending test of small banks because the banks’ and thrifts’ investment dollars are needed in their communities. As a compromise, the new proposal is recommending the following measures.
The proposed regulation:
The proposal to revise rules implementing CRA may be found at www.access.gpo.gov/su_docs/fedreg/frcont05.html. Go to the Federal Register notice for March 11, 2005, scroll down to the Federal Reserve System, proposed rules, and select the pdf document. The deadline for comments is May 10, 2005.