The most recent major revision of Community Reinvestment Act (CRA) regulations was in 1995. Since the statute was enacted in 1977, and even since 1995, there have been significant changes in the banking industry. In May 2022, the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation proposed updates to CRA regulations, setting into motion a joint effort to modernize a key policy tool that encourages broader access to banking services. The notice of proposed rulemaking (NPR), while complex, appears well-designed to expand access to credit, investment, and basic banking services in all communities banks serve and to increase clarity, consistency, and transparency for banks, regulators, and the public.
Our comments on the NPR focus on three areas for which we have conducted substantial quantitative analysis. First, we discuss the separate consideration of low-income and moderate-income communities and borrowers in the retail lending test for mortgages. We analyze the impact of the retail lending benchmarks and the related evaluation framework for closed-end mortgage lending. Next, we discuss whether purchase and refinance loans should have separate retailing lending tests, whether non-owner-occupied loans should be excluded from the retail lending test, and whether multifamily lending should be included in the retail lending tests. We then comment on the number of retail lending assessment areas the NPR would impose on both mortgage and small business lending. Finally, we offer comments on special purpose credit programs and the public availability of data related to the CRA.