The HFSC Subcommittee on Consumer Protection and Financial Institutions today debated various ways to improve the Community Reinvestment Act (CRA), looking for ways to expand the Act to new market players and to change much in the OCC’s initial foray into a regulatory rewrite (see FSM Report CRA23). Subcommittee Chairman Meeks (D-NY) pushed for eliminating “loopholes” in CRA, including that CRA credit is provided on loans in low- and moderate-income (LMI) assessment areas even when these loans are not to LMI borrowers, that CRA applies only when a bank has a deposit-taking branch in an assessment area, and that CRA does not apply to nonbank lenders. Notably, Treasury somewhat surprisingly endorsed extending CRA to nonbanks in its recommendations on CRA reform last year (see Client Report CRA20). Rep. Meeks also pushed back on the OCC’s proposed single-ratio metric for CRA compliance. Full Committee Chairwoman Waters (D-CA) agreed that CRA should be extended to nonbanks, noting that they last year accounted for over half of all mortgages. She also agreed that CRA should focus on whether a bank is lending to LMI households.
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