Jul 24, 2019 · Discuss a CRA's responsibilities in finalizing the study. A CRA must be at the site to do a closeout visit. It would be extremely unusual to try to close out a site without being there in person. Following are the list of CRA responsibilities in finalizing the study: 1) The CRA should make sure that all the case report forms, as well as any corrections or query forms, are …
2. Percentage of loans/lending-related activity in an institution’s assessment area 3. Geographic distribution of loans, including to LMI areas 4. Record of lending/lending related activity to: • Borrowers of different income levels; and/or • Businesses and farms of different sizes. 5. Response to CRA related complaints
Jan 04, 2021 · 1 in the financial Crisis, In Gitman and Zutter. Discuss the root causes of the crisis and damages that caused to society as a whole. 2 In hindsight explain the specific lessons that can be learned for the government, for the banks and other lenders as well as for the individual borrower. 3 what ethical issues did the banks and lenders face?
exogenous variation in banks’ incentives to conform to CRA standards around regulatory exams, we study whether the CRA led to riskier lending. By tracing out banks’ responses to CRA evaluations in terms of both the quality and the quantity of mortgages originated, we show clearly that the CRA did lead to riskier lending.3
CRA regulations are at the core of Fannie's and Freddie's so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
Starting in 1995 , banks were measured on their use of innovative and flexible" lending standards, which included reduced down payments and credit requirements. Banks that didn't meet Clinton's tough new numerical lending targets were denied merger plans, among other penalties.
WaMu CEO Kerry Killinger has blamed the CRA for his bank's overexposure to risky loans. He said he wanted to tighten lending requirements, but "such measures would have presented other issues such as the company's CRA rating and its commitment to serving its (low-income and minority) customers and communities.".
Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession. But a new study by the respected National Bureau of Economic Research finds, "Yes, it did.
Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and other lenders agreed to sign contracts with the government supporting such lending under threat of being brought under CRA rules.
A second step toward a modern CRA is to address the shortcomings of applying the law only (and inconsistently) to banks with physical, deposit-taking branches. In general, there should be more specific and reliable answers to the questions of where exactly and when banks can earn CRA credit beyond their own assessment areas (AA’s), as well as which credit-lending companies should fall within the CRA’s purview. Many commentators have suggested expanding the number of AA’s, particularly for large retail banks that offer their services over the Internet.20 But as Mark Willis of the NYU Furman Center writes, “To overcome the geographic limits inherent in a system of individual AA’s would require creation of a large number of new AA’s in markets where a bank has no physical, local presence yet would still be subject to the three-part retail bank test of lending, investment, and services. The burdens such a system would impose could in fact discourage Internet retail banks from serving smaller and rural communities.”21
At the core of the present CRA reform debate is the battle over objective performance metrics. In its request for comments, the OCC asked whether the agency should create a single metric for measuring bank CRA performance, either at the level of the AA or the institution. This metric would aggregate all CRA lending, investments, and services and compare that number to some bank balance sheet measure, either total assets, deposits, or capital. Each stakeholder who addressed this topic at the October 29th event expressed serious concerns about reducing a bank’s entire CRA evaluation and rating to one number.
The third step toward a modern CRA is to set clear standards for what activities do and do not count towards CRA credit. Determinations about the eligibility of specific lending activities, especially with regard to community development, are inconsistent and non-transparent. A pre-clearance system or ex ante approved activities lists would go a long way toward improving bank CRA planning and decision-making, according to Dafina Stewart, who spoke for the Bank Policy Institute at the event.28 Additionally, as Stewart maintained, it is dicult for banks to remediate deficiencies that are noted in CRA evaluations because by the time a bank receives the results of its exam, the information is already outdated. As Comptroller Joseph Otting himself readily admits, “[P]erformance evaluations take too long, lack transparency and suffer from subjectivity that causes inconsistency from bank to bank. This ineciency wastes resources and frustrates community development practitioners, bankers and regulators alike.”29
Given the current prominence of nonbanks and Internet banks and the urgent need to address the new urban crisis of affordable housing, the CRA must be modernized, yet its spirit of local collective action in response to local needs should also be preserved. A single metric for evaluation, which the OCC has tentatively endorsed, is unlikely to be capable of summarizing these local needs and, worse still, could lead to a decrease in lending or even exacerbate the affordable housing crisis. Additionally, many experts—academics, advocates, and public and private sector leaders alike—have stressed the importance of regulatory coordination among the three agencies responsible for overseeing the CRA. Although disagreements over the specifics of CRA reform persist, there is one final point of consensus that each stakeholder at the October 29th event reiterated. Namely, any proposal to update the CRA should be informed by careful study and all changes, including their potential impacts, should be grounded in good data.