BOSTON, August 5, 2022 /PRNewswire/ — Ceres today submitted comments to the Fed, FDIC and OCC urging agencies to modernize the Community Reinvestment Act (CRA) by explicitly incorporating racial equity and strengthening environmental provisions and climatic. This RNP represents the most significant changes to CRA regulations in more than 20 years.
The CRA requires federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they operate, with an emphasis on low- and moderate-income (LMI) neighborhoods. Ceres’ submission is in response to requests for comment on the ARC’s Interagency Notice of Proposed Rulemaking (NPR) update.
“Climate change is exacerbating racial and economic inequality and frustrating ARC’s goal of ending the nation’s long and painful history of loan discrimination and resulting disinvestment in communities of color and d ‘other financially vulnerable communities’, Ceres wrote in his comments.
Ceres recommends that the rule contain the following provisions:
- Explicitly include borrower and community race as a metric ensure that historically demarcated communities and those vulnerable to climate change have better access to credit and services.
- Ask banks to leverage available data tools to understand where climate-vulnerable communities are located found in the assessment areas and work to stimulate investment in these communities.
- A revised definition of community development activities to better target activities to communities in need. Ceres supports NPR’s addition of the definition of disaster preparedness and climate resilience in community development (CD) activities and an expanded, though not exhaustive, list of eligible climate-related activities.
- Measuring the impact of community development activities and establishing benchmarks and measures to assess the strength of community development funding.
- Encourage banks to increase community engagement and relationship building with climate and environmental justice organizations.
- Avoid negative impacts on IMT communities from community development activities receiving an ARC credit. All activities that contribute to demonstrable negative impacts or disproportionate consequences, such as displacement, predatory lending and increased environmental risk, should not receive credit and should lead to downgrades in ratings.
- Ensure that changes to assessment areas sufficiently reflect online lending and deposit activity, particularly in small metropolitan areas and rural counties.
- No change to asset threshold for small and medium small banks. This would reduce ARC liability for 20% of all banks, reducing funding for community development and the establishment of branches in IMT communities.
Media Contact: Reginald Zimmermann