3:42 PM
Julio Barreto
Last week aviewfromdc held the position that local housing and community development organizations needed to explore relationships with local lending institutions to generate additional funds. It is our opinion the bail out and other federal priorities will make it extremely difficult and highly unlikely local agencies will see an increase in federal funds. Nothing has occurred in the past week to change that assessment. In fact, the vents of the past week have reinforced our view that local agencies need to be more creative in seeking additional funds to serve their low- and moderate-income population.
One tool which can be used to generate additional resources is the Community Reinvestment Act (CRA). In this issue we are providing our readers with a summary of the act taken from the National Community Reinvestment Coalition web site. We also encourage our readers to visit the Federal Financial Institutions Examination Council’s web site as well. This week we would like to provide a summary of the act. For more detailed information on how an agency can use CRA for it local purposes, we recommend visiting NCRC’s site for a manual and other resources highlighting the use of CRA.
CRA is an act which was passed in 1977 to establish a framework to monitor the lending, investment and services offered by lending institutions in low- and moderate-income communities. Four federal agencies are responsible for monitoring financial institutions: the Office of the Comptroller of the Currency examines nationally chartered banks; the Office of Thrift Supervision examines savings and thrifts; the Federal Deposit Insurance Corporation and the Federal Reserve Board monitor state chartered banks.
Banks are examined according to size to determine their responsiveness to community needs. For example, institutions with more than $1 billion in assets are reviewed differently from institutions with fewer resources. They are subject to a more rigorous exam which considers the performance context of the lending institution. Those with less than $1 billion in assets but more than $250 million are subject to a streamlined test. Institutions with less than $250 million in assets are subject to five criteria in their examinations: the loan to deposit ratio; the percentage of loans in the bank’s assessment area, the bank’s distribution of loans to individuals of different income levels and businesses and farms of different sizes, the geographic distribution of loans, and the bank’s record of responding to written complaints about its lending performance in its assessment area.
NCRC has a wealth of resources available to local leaders interested in learning more about CRA and how their local banks fair under the law. They also have a section on their web site which refutes the comments of conservative commentators who blame CRA for the current mortgage crisis.
Interesting Reads
Housing and Community Development
Multifamily Bond Market Stalled as Rates Soar
By Liz Enochs
Affordable Finance News
Affordable Housing Feels the Pain
By Donna Kimura
Affordable Finance News
Why This 'Credit Crisis' Hits Everyone
By Dave Kansas
The Wall Street Journal
South Side Story
Starring Barack Obama, Emmett Till, Richard Wright, Mahalia Jackson, Martin Luther King Jr., Muddy Waters, Harold Washington, Richard J. Daley And a Cast of Thousands
By Wil Haygood
Washington Post Staff Writer
The Washington Post
Pressured to Take More Risk, Fannie Hit a Tipping Point
By Charles Duhigg
The New York Times
The End of Prosperity?
By Niall Fergusan
Time Magazine
Viewpoint: Minorities a convenient scapegoat for U.S. financial woes
By Cynthia Tucker
The Baltimore Sun
Campaign 2008
In Ordeal as Captive, Character Was Shaped
By Michael Dobbs
Washington Post Staff Writer
The Washington Post
U.S. Fiscal Crisis Seems to Have Altered Political Map
By Anne E. Komblut and Dan Balz
Washington Post Staff Writers
The Washington Post
Economic Unrest Shifts Electoral Battlegrounds
By Adam Nagourney and Jeff Zeleny
The New York Times
One tool which can be used to generate additional resources is the Community Reinvestment Act (CRA). In this issue we are providing our readers with a summary of the act taken from the National Community Reinvestment Coalition web site. We also encourage our readers to visit the Federal Financial Institutions Examination Council’s web site as well. This week we would like to provide a summary of the act. For more detailed information on how an agency can use CRA for it local purposes, we recommend visiting NCRC’s site for a manual and other resources highlighting the use of CRA.
CRA is an act which was passed in 1977 to establish a framework to monitor the lending, investment and services offered by lending institutions in low- and moderate-income communities. Four federal agencies are responsible for monitoring financial institutions: the Office of the Comptroller of the Currency examines nationally chartered banks; the Office of Thrift Supervision examines savings and thrifts; the Federal Deposit Insurance Corporation and the Federal Reserve Board monitor state chartered banks.
Banks are examined according to size to determine their responsiveness to community needs. For example, institutions with more than $1 billion in assets are reviewed differently from institutions with fewer resources. They are subject to a more rigorous exam which considers the performance context of the lending institution. Those with less than $1 billion in assets but more than $250 million are subject to a streamlined test. Institutions with less than $250 million in assets are subject to five criteria in their examinations: the loan to deposit ratio; the percentage of loans in the bank’s assessment area, the bank’s distribution of loans to individuals of different income levels and businesses and farms of different sizes, the geographic distribution of loans, and the bank’s record of responding to written complaints about its lending performance in its assessment area.
NCRC has a wealth of resources available to local leaders interested in learning more about CRA and how their local banks fair under the law. They also have a section on their web site which refutes the comments of conservative commentators who blame CRA for the current mortgage crisis.
Interesting Reads
Housing and Community Development
Multifamily Bond Market Stalled as Rates Soar
By Liz Enochs
Affordable Finance News
Affordable Housing Feels the Pain
By Donna Kimura
Affordable Finance News
Why This 'Credit Crisis' Hits Everyone
By Dave Kansas
The Wall Street Journal
South Side Story
Starring Barack Obama, Emmett Till, Richard Wright, Mahalia Jackson, Martin Luther King Jr., Muddy Waters, Harold Washington, Richard J. Daley And a Cast of Thousands
By Wil Haygood
Washington Post Staff Writer
The Washington Post
Pressured to Take More Risk, Fannie Hit a Tipping Point
By Charles Duhigg
The New York Times
The End of Prosperity?
By Niall Fergusan
Time Magazine
Viewpoint: Minorities a convenient scapegoat for U.S. financial woes
By Cynthia Tucker
The Baltimore Sun
Campaign 2008
In Ordeal as Captive, Character Was Shaped
By Michael Dobbs
Washington Post Staff Writer
The Washington Post
U.S. Fiscal Crisis Seems to Have Altered Political Map
By Anne E. Komblut and Dan Balz
Washington Post Staff Writers
The Washington Post
Economic Unrest Shifts Electoral Battlegrounds
By Adam Nagourney and Jeff Zeleny
The New York Times
