Although consumer and community advocates were quick to protest it, this report assesses new Treasury CRA recommendations we conclude could both reduce bank burden and make CRA incentives more meaningful in terms of actual bank community investment. As we noted in a recent Economic Equality blog post, banks generally receive satisfactory or better CRA ratings on the strength of government-backed mortgage and tax-preferred lending. As Treasury notes, this does not necessarily support low-and-moderate income (LMI) home ownership nor does it fund other activities – e.g., small-business lending – also critical to LMI opportunity. Opponents have also cited aspects of the recommendations that track recent OCC action (see FSM Report CRA19) eliminating from the CRA process consideration of consumer-protection violations and more tightly tying alleged discrimination to CRA concerns. Changes seen as unduly favorable to banks include those that increase the certainty of CRA examinations, revise the definition of eligible lending and services, and reduce the ability of protesters to delay M&A transactions.
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