Federal Reserve, FDIC and OCC to Develop Joint Community Reinvestment Act Rule

Filed in Advocacy, Housing Finance by on July 21, 2021 3 Comments

piggy bankThe Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have jointly announced that they will work together to modernize the regulations that implement the Community Reinvestment Act (CRA).

The CRA requires the federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods.

As part of this joint effort, the OCC has announced that it is rescinding its CRA rule issued in May 2020 and working with the Federal Reserve and FDIC on an orderly transition to a new rule.

The next step is for the three agencies to develop a joint Notice of Proposed Rulemaking.

“Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods,” the three banking regulators said in a joint statement.

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Comments (3)

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  1. John Galt says:

    Here we go again. Does this remind anyone of 2008? Mandated loosening of lending restrictions, followed by banks rapidly selling bundles of CRA mortgages for securitization by Fannie Mae, Freddie Mac and Wall Street, followed by default of un-creditworthy and overzealous fresh money borrowers….hmmm, sounds pretty familiar.
    Be listening for politicians and regulators to utter phrases like “everyone deserves a home” and “we’re doing this for the less advantaged”. When that is heard, it will be too late to recover as the scheme will have reached its peak. The only way out at that point will be down, with several years of resulting clean up of the devastation.

    George Santayana astutely told us that “Those who cannot remember the past are condemned to repeat it”. If we are really serious about preventing a recurrence of this crisis, rather than increasing the power of the government over the economy, our first order of business should be to correct the destructive housing policies of the U.S. government.

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