Comptroller Joseph M. Otting Chair Jelena McWilliams
Comptroller of the Currency Federal Deposit Insurance Corporation
Comp 400 7th Street, SW 550
17th Street, NW
Washington, D.C. 20219 Washington, DC 20429
Docket No. OCC-2018-0008
Dear Comptroller Otting & Chair McWilliams:
[Organization] submits these comments in response to the OCC/FDIC’s Notice of Proposed Rulemaking (the “Proposal”) regarding the Community Reinvestment Act (CRA). [Organization] is opposed to the Proposal’s drastic shift from qualitative to quantitative evaluation measures. Dollar amounts certainly matter, but not to the exclusion of a qualitative assessment of banks’ activities vis-à-vis local community needs. The net impact of the Proposal would be to reduce bank investments and services in low- and moderate-income (LMI) communities. This is unacceptable. The Proposal runs counter to the spirit of the law itself.
[About your organization: mission/vision. How CRA has impacted your work.]
A pass-fail test for evaluating banks’ retail lending distribution would cause any number of banks to do just enough to pass. Any student who has ever taken a pass-fail class knows this to be true. Similarly, converting the CRA activities test into a dollar-based metric would encourage banks to cut down on engaging in smaller projects and investments and to conserve resources by focusing instead on fewer projects but with a higher dollar value. Banks will likely choose single multi-million dollar projects and ignore small, impactful loans that have higher transaction costs. Why, for example, would a bank expend resources [fill in with a CRA program applicable to your field] when the bank could spend millions improving an athletic stadium in an LMI Opportunity Zone?
The CRA is one of the only tools we have to help ensure that banks meet the needs of LMI people [or “our clients,” if applicable] and communities. Modernization or simplification must preserve what works under the CRA. We agree with Federal Reserve Gov. Brainard who recently observed that one of the “core strengths” of the CRA is creating an ecosystem that “encourages banks to engage on the priorities identified by local leaders.” Under the Proposal, this core strength is stripped away in the name of supposed objectivity. To protect the CRA ecosystem and the financial institutions, nonprofits, and LMI communities within it, we urge you to suspend the rulemaking process, invite the Federal Reserve back to the table, and release a proposal only when all three regulators are on the same page. This approach is in the best interests of the banks, the community, and the regulators.
Very truly yours,
[Organization head’s name]
[Organization head’s title]