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Community Reinvestment Act (CRA) Deep Dive Webinar

August 6, 2024 9:00 am - 4:00 pm

After what has seemed like an endless series of irregular periods of action, the OCC, Federal Reserve, and FDIC have finally issued their long-awaited amendments to the Community Reinvestment Act (CRA) regulations.

Banking has come a long way since 1977, when the original CRA regulations were issued – we’ve seen the evolution into the incredible new array of digital products and services and major changes in the way those products and services are delivered.

But the core concepts of the CRA remain: banks are evaluated on their performance within their communities, particularly on the lending side, with a particular focus on Low- and Moderate-Income (LMI) areas within its assessment area. The CRA regulations have long needed to be updated to reflect the new realities of banking, and we finally know what those responsibilities are. However, we’ve seen some important differences from the Proposed Rule that we must understand and incorporate.

As expected, the compliance responsibilities are divided into three distinct categories, depending on bank asset size: small, intermediate, and large. The larger a bank is, the more changes to its CRA responsibilities it will see. But change will impact all banks to some degree.

The litigation against the agencies’ new rule alleges supposed “overreach.” What is likely to happen, and when? Will the rules be revoked (unlikely, but you never know)? Will they be changed (possibly)?

We’ll also address the state of CRA today – what is necessary to achieve an Outstanding (or Satisfactory) rating? We’ll be living with the current CRA regulations for likely a few more years, so it’s important to understand what it takes to succeed today, as well as plan for the future.

What You’ll Learn

  • The four chief goals of the new rules:
    • (1) Encourage banks to expand access to credit, investment, and banking services in LMI communities;
    • (2) Adapt to changes in the banking industry, including internet and mobile banking;
    • (3) Provide greater clarity and consistency in the application of the CRA regulations; and
    • (4) Tailor CRA evaluations and data collection to bank size and type.
  • How these goals will be accomplished, including new tests for large and intermediate banks, and revised data collection responsibilities, among many other changes
  • Evaluation of lending activities outside a bank’s assessment area
  • Evaluation of activities in “non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models.” What does this mean? What will be evaluated?
  • Framework to evaluate digital delivery of products and services
  • The new “metrics-based approach” to CRA evaluations, using benchmarks and peer data
  • Listing CRA-eligible activities – what are these?
  • More clarity with “community development”
  • New asset-size thresholds – what are the responsibilities within each of these tiers?
  • Small banks – continue to be evaluated under existing standards or opt into the new framework?
  • The new Retail Lending Test, Retail Services and Products Test, the CD Financing Test, and the CD Services Test – what do these mean, and who must do what here?
  • Use of HMDA data within the new CRA framework
  • Transparency with the public, including encouraging public input on community needs and opportunities
  • Reinforcing the connection between CRA and fair lending – it’s always been there but now it’s explicit
  • More objectivity in the evaluation process, including weighting of factors
  • Maintains the strategic plan option
  • Timeframes for compliance, including provisions allowing more times for banks to come into compliance with the new regulation, especially in light of potential litigation
  • Current state of CRA: dealing with the current requirements in the meantime

Who Should Attend
This event will be useful for anyone in the bank who has any sort of direct responsibility under the CRA, including compliance professionals, risk managers, auditors, legal counsel, and others. As well, anyone on the lending side of the bank who will be responsible for any of the many activities, products, services, and activities that will be evaluated under the new standards, will benefit from the discussion.