Michael Rubinger testifies on the Community Reinvestment Act (CRA)
Date Published: 07/19/2010
Author: Michael Rubinger
The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), The Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) are holding a series of joint public hearings to receive public comments as they consider updating regulations governing procedures for assessing a financial institution's performance under the Community Reinvestment Act (CRA).
The agencies will consider how to update the regulations to reflect changes in the financial services industry, changes in how banking services are delivered to consumers today, and current housing and community development needs. The agencies also want to ensure that the CRA remains effective for encouraging institutions to meet the credit needs of communities. While the agencies recognize public comments may discuss matters requiring statutory changes, the agencies’ focus is on potential regulatory changes.
Michael Rubinger, president and CEO of LISC, testified before the panel in Arlington, Virginia on July 19, 2010.
Excerpt
While residents and businesses are the immediate beneficiaries of community development, it also contributes to the economic and social vitality of cities and towns, their surrounding regions, and the nation as a whole.
Motivated by CRA, banks have made billions of dollars of successful community development (CD) loans and investments that have generated over one million affordable rental homes, the construction and rehabilitation of numerous affordable owner-occupied homes, and many millions of feet of economic development and community service facilities. While CD financing can be challenging to structure, it has proven to be both safe and profitable.
One of CRA's signature achievements has been to create successful partnerships among banks, all levels of government, and both non-profit and for-profit developers.
Recommendations for Revising CD Policies
We believe that CD deserves better attention under CRA than it currently receives. While other aspects of CRA – including home mortgages, small business lending and depository services – remain important and complement CD, there needs to be a better balance.
The federal banking agencies should revise the way CRA considers CD activities.
- Create a new CD test.
- Revise CD assessment areas.
- Differentiate CD responsibilities for various types of large banks.
- CRA examiners should get CD training.
For Mr. Rubinger's complete testimony and a more detailed description of these recommendations, please download the full transcript of his testimony. (PDF, 77 KB)
Topics: Policy, --Housing, --Economic Development
Type: Speech / Testimony / Briefing