WASHINGTON — Every Democrat on the House Financial Services Committee has asked federal banking regulators to more than double the public comment period for proposed changes to Community Reinvestment Act rules, saying the plan needs closer scrutiny before the agencies move forward.
Rep. Maxine Waters of California, the committee’s ranking Democrat, and the other Democratic members asked Federal Deposit Insurance Corp. Chairman Travis Hill and Comptroller of the Currency Jonathan Gould to allow at least 120 days for comments. The current 60-day period ends Oct. 13, according to the Office of the Comptroller of the Currency.
CRA requires regulators to assess how well banks help meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods. The FDIC and OCC say their proposal would focus evaluations more closely on lending, clarify which community development activities qualify for credit and reduce regulatory burdens, particularly for community banks. It would also raise the asset thresholds used to classify small and intermediate banks.
Additional Contentions
The lawmakers contend the changes could narrow how regulators evaluate banks’ services and community development work, reduce the number of banks assessed for some of those activities and make an “outstanding” rating easier to obtain. They warned that weaker incentives for affordable housing investment could undercut provisions of the recently enacted 21st Century ROAD to Housing Act. Those are the Democrats’ assessments of the proposal, which remains open for public comment.
“Taken together, the proposed revisions likely will significantly impact which institutions are encouraged to meet the credit needs of their communities through activities that extend beyond lending such as community development activities,” the lawmakers wrote. They said the proposal runs more than 400 pages and cited concerns raised by more than 375 financial institutions, community organizations and other groups seeking more time to review it.
Additional Criticism
The Democrats also criticized the FDIC board’s use of a vote outside a public meeting to advance the proposal. “We request that the public comment period be extended to no less than 120 days to give members of the public more time for substantive review and comment,” they wrote.
