The Blade, January 18, 2020: Fairness in lending
A proposal by federal regulators updates but weakens the rules that are used to evaluate whether banks and credit unions discriminate in lending in low-income communities. It needs to be amended before it is adopted.
The National Community Reinvestment Coalition told the Washington Post that banks approved an average of $78 billion a year between 2012 and 2017 in community development loans and $55 billion a year in small business loans in low-income areas.
Regulators are to develop a list of activities under the new regulation, and banks could get preapproval from regulators for Community Reinvestment Act of 1977 (CRA) projects. The new Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) proposal could allow banks to get credit for activities that the rules so far have disallowed, including offering mortgages in high-cost areas, outside of traditional CRA areas.
Critics think this change will divert regulators’ attention from initially intended CRA duties.
