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Banks could receive many more failing grades from their regulators under a recently proposed overhaul of the Community Reinvestment Act (CRA). That’s partly because, according to a joint notice of proposed rulemaking from bank regulators on Thursday, banks’ performance would be judged by where they lend, not just where they have branches. Doing so would result in 32% of examined lenders receiving a “Needs to Improve” score, compared to the 16% earning that mark for their retail performance from 2017 to 2019, bank regulators estimated. Don’t expect the regulators to start denying bank mergers yet, however. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve, which together proposed the changes to the CRA, so far have not suggested that any changes be made to how the law is applied to merger and other applications related to acquisitions and expansions. Still, the proposed rule could set the stage going forward for expanding the CRA’s reach and the increased consideration of community performance during merger reviews — as banking agencies weigh future changes to regulations governing those transactions. “Honestly we don’t know if that is coming or not,” said Ricard Pochkanawala, senior policy council at the Center for Responsible Lending. “But what we hope to see is that this leads to more transparency of financial institutions serving minority and low- and moderate-income communities, and that it is used and applied in actually, stringently, scrutinizing bank mergers.” The CRA mandates that bank regulators take CRA…

The post Ready or not, CRA modernization is at the door appeared first on Emerald Coast Gazette – NWF News.

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