After what has seemed like an endless series of irregular periods of action, including the issuance of a Final Rule (that was later revoked), the OCC, Federal Reserve, and FDIC finally issued their long-awaited amendments to the Community Reinvestment Act (CRA) regulations. And now they’re being contested in court – what is going to happen, and when might our institutions have to do something?
These are questions that don’t have answers yet, but that doesn’t mean we should sit on the sidelines waiting. The new rules are extensive and will mean huge changes for large institutions, and big changes for intermediate-sized institutions. Small institutions will have some options, though.
As expected, the compliance responsibilities are divided into three distinct categories, depending on institution asset size: small, intermediate, and large. The larger an institution is, the more changes to its CRA responsibilities it will see. But change will impact all institutions to some degree.
There are a number of strategic and operational decisions that must be made in advance of the effective date of the new rules. The core concepts of the CRA remain: institutions 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. But how these requirements will be evaluated is changing into a much more objective test, which means your institution must adjust.
We’ll discuss who has to do what and when and set the stage for individual institutions’ formation of working groups and stakeholder meetings, so you can understand how these changes impact you. We’ll pay particular attention to the timeframes involved, as implementation will be somewhat of a phased process.
What You’ll Learn
- What the new rule’s impacts are likely to be for large, intermediate, and even small institutions
- What will your institution’s asset size be when the new rules become effective? How should you plan for this?
- Will the new rules change where you do business, and how you do it?
- Adjusting to the new rule’s metrics-based approach – know where you stand now
- The four chief goals of the new rules:
- Encourage institutions to expand access to credit, investment, and banking services in LMI communities;
- Adapt to changes in the industry, including internet and mobile banking;
- Provide greater clarity and consistency in the application of the CRA regulations; and
- Tailor CRA evaluations and data collection to institution size and type
- How these goals will be accomplished, including new tests for large and intermediate institutions, and revised data collection responsibilities, among many other changes
- Evaluation of lending activities outside an institution’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
- Listing CRA-eligible activities – what are these?
- More clarity with “community development”
- Reinforcing the connection between CRA and fair lending – it’s always been there but now it’s explicit
- Timeframes for compliance, including provisions allowing more times for institutions to come into compliance with the new regulation, especially in light of potential litigation
Who Should Attend
This webinar will be useful for anyone who has any sort of direct responsibility under the CRA, including compliance professionals, risk managers, auditors, legal counsel, and others, as well as anyone on the lending side who will be responsible for any of the many activities, products, and services that will be evaluated under the new standards will benefit from the discussion. And, of course, senior management and Boards of Directors will benefit by understanding what the new requirements entail and the timeframes for compliance with the new standards.
