Community Reinvestment Act: Treasury Releases CRA Reform Recommendations Focused on Assessment Areas, Examination Clarity and Flexibility, Examination Processes, and CRA Performance

Sullivan & Cromwell LLP - April 10, 2018
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On April 3, the U.S. Department of Treasury (“Treasury”) issued a memorandum (the “Memorandum”) to the Office of the Comptroller of the Currency (the “OCC”), the Board of Governors of the Federal Reserve System (the “FRB”), and the Federal Deposit Insurance Corporation (the “FDIC” and, together with the OCC and the FRB, the “CRA Regulators”) setting forth findings and recommendations resulting from Treasury’s review of the Community Reinvestment Act (“CRA”) examination and ratings framework.   In the course of Treasury’s review, it consulted with nearly 100 stakeholders, including the CRA Regulators, community and consumer advocacy groups, academics, think tanks, financial institutions, trade associations, and law firms.  The Memorandum expresses Treasury’s continued support for the CRA’s fundamental purpose to encourage banks and other insured depository institutions to meet the credit and deposit needs of the communities in which they operate, including low- and moderate-income communities.   It makes recommendations that can be implemented mostly, if not entirely, without statutory change. These recommendations are intended to further the original purpose of the CRA while reducing the “complexity and burden on banks, regulators, and community advocates.”