Community Reinvestment Act Could Receive Meaningful Overhaul

The Community Reinvestment Act (CRA) regulations could potentially soon be strengthened and modernized based on a recent proposal from federal bank regulatory agencies that would help to better achieve the purposes of the law.

CRA is a landmark law enacted 45 years ago to encourage banks to help meet the credit needs of their local communities, including low- and moderate-income neighborhoods.

The proposal would expand access to credit, investment, and basic banking services in low- and moderate-income communities; provide greater clarity, consistency, and transparency; tailor CRA evaluations and data collection to bank size and type; maintain a unified approach; and adapt to changes in the banking industry, including internet and mobile banking.

‘No Longer Needs to Be a Burden’

Reid Thomas, Chief Revenue Officer and Managing Director of JTC Americas, responsible for overseeing the day-to-day operations of the Specialty Financial Administration business unit, tells that the government and its agencies have implemented a number of initiatives that bring private capital into communities in need in recent years. 

“Far too often, however, these initiatives are incorrectly deemed to be failures due to a lack of proper transparency and reporting. It’s timely that the proposed CRA reform act includes such reporting provisions because with today’s technology, automation and administration this no longer needs to be the burden it was 45 years ago.”

Efforts to Make CRA More Metric-Driven and Quantifiable Applauded

Michael Korengold, CEO of Enhanced Capital, an investment firm committed to driving quantifiable impact across the US lower middle market, tells said his firm “certainly supports” the modernization of the CRA requirements to better reflect the needs of low- and moderate-income communities. 

“In particular, we support the efforts to make CRA more metric-driven and quantifiable so that banks can better evaluate opportunities and understand on the front end how they’ll be judged in their CRA assessments.”

Comments on the proposal will be accepted on or before Aug. 5, 2022.

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