Independent Banker - September 2023 - 33

Next: A history lesson in inflation 
prohibited certain racial, gender
and other forms of discrimination
in residential real estate, banking
services and credit transactions,
and requiring lenders to track
data on mortgage loans. Laws and
regulations alone could not stem
racism or unfair lending practices;
however, regulators gained
some new tools to help identify
and sanction some of the worst
manifestations of discrimination in
lenders' providing access to capital.
Despite the changes, people
in low- and moderate-income
neighborhoods continued to struggle
with access to credit, and, in 1977,
the CRA was passed and was
designed to evaluate banks' efforts
to meet the credit needs of all people
in their communities. Regulators
developed examination methods to
assess whether creditors' practices
improperly excluded neighborhoods
in their market areas.
Updated CRA proposals
While many of those methods are
still used today, CRA exams have
evolved to better evaluate banks'
practices and encourage lenders to
further work with their communities
and those living or doing business
in them.
The most recent CRA proposal
seeks to accomplish several things:
¡ Expanding access to credit,
" Banker education will be
critical to the transition
to new data collection,
reporting and recordkeeping
requirements of the rule. "
-MICKEY MARSHALL, ICBA
investment and basic banking
services in low- and moderateincome
communities. Regulators
would evaluate a wider range
of bank activities for CRA and
promote community engagement
and financial inclusion
¡ Adapting to changes in the banking
industry, including internet
banking, branchless banking,
mobile banking and hybrid models
¡ Providing greater clarity,
consistency and transparency by
adopting a metrics-based approach
to CRA evaluations of retail lending
and community development
financing and clarifying eligible
CRA activities
¡ Tailoring CRA evaluations and data
collection to bank size and type
¡ Maintaining a unified approach
from regulators and allowing more
feedback from stakeholders
Marshall offers some thoughts on
how community banks might prepare
QUICK STAT
16.5%
of total mortgage lending in the
U.S. goes to low- and moderateincome
neighborhoods.
Source: Urban Institute
for the new process.
" At this point, it's speculation,
but I don't expect that the new
retail lending test and community
development test to experience
significant changes from the proposal,
and those areas could be a basis for
banks wishing to prepare for what
they would eventually have to comply
with, " he says.
" It seems more likely that there will
be changes related to the assessment
areas and how banks will be assessed
in areas where they do not have a
physical branch. "
Along with the pending CRA
changes, bankers must comply with
the new Dodd-Frank Section 1071
rule amending Regulation B - ECOA.
The rule requires covered financial
institutions to collect and report to
the Consumer Financial Protection
Bureau (CFPB) data on applications
for credit for small businesses,
including those that are owned by
women or minorities.
" Going forward, it will be the
Section 1071 data that's used as the
basis for the small business lending
evaluation in CRA, " Marshall says.
" Regulators will try to synchronize
the data collection and reporting
benchmarks between the 1071 rule
and the new CRA rule. "
He adds, " ICBA will offer briefings
on the final rule, and we are
expecting the regulators to present
a sort of 'CRA roadshow' when we
have a final rule. Banker education
will be critical to the transition to
new data collection, reporting and
recordkeeping requirements of
the rule. "
Mary Thorson Wright is a writer
in Virginia.
independentbanker.org // 33
http://www.independentbanker.org
Independent Banker - September 2023

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