by Jeff Sovern
So Banking Exchange reports. Excerpt:
Otting believes a flaw of how CRA has evolved is its strong emphasis on low-to-moderate income mortgage lending and lending for low-to-moderate income multifamily housing. He thinks more types of activities should count toward meeting CRA’s intention. For example, he says, small business lending in low-to-moderate income areas should count. Likewise, he believes that building community centers that can be used in inner cities to provide job training, financial literacy, and related skills also should count. In addition, he thinks more donations that support the community should be counted; this category has narrowed substantially over the years.
Beyond this, Otting thinks student loans should qualify for CRA credit. “You’re taking a person from an underprivileged area of the community and you’re helping them reach outside that community to gain skills and be successful people,” he explains.
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Yet another change that the new Comptroller would make to CRA regulation is the concept of the assessment area. “I think assessment areas are a little archaic, frankly,” says Otting. “If banks are operating in a particular state, they should be making investments in that state. But the old days of drawing a circle around one county and saying that’s your assessment area and the only place you can make qualified CRA investments, I think that time has come to an end.”
One comment about the last paragraph: if he means that you satisfy the CRA by making loans anywhere in your home state, that seems a far cry from the CRA goal of making sure that some money deposited in banks in low-income communities is used to finance loans in that community.
