Should consumer protection failures play a bigger role in CRA grades?
By Brendan Pedersen, Neil Haggerty
The recent Community Reinvestment Act rating downgrade for USAA Federal Savings Bank highlights a potential strategy backed by consumer advocates for reforming the decades-old law. The CRA mostly encourages banks to serve lower-income communities in their market to combat redlining. By contrast, other laws focus more directly on punishing banks for unfair practices, fair-lending violations or harming a protected class…“This is an important warning indication that the agencies, including the OCC, about which there are sometimes questions, tend to take illegal credit practices and fair-lending violations fully into CRA account and likely downgrade as a result,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, of the San Antonio bank’s downgrade.