Toomey Calls for Greater Transparency Concerning Community Reinvestment Act Agreements
Despite Legal Sunshine Requirement, CRA Agreement Details Often Hidden from Public
Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) wrote to the Board of Governors of the Federal Reserve System (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) raising concerns over the lack of transparency associated with community benefits plans (CBPs) developed by banks and community activist groups in connection with the Community Reinvestment Act (CRA).
In
his letter,
Ranking Member Toomey wrote:
“Greater
transparency is critically necessary for Congress and the public to judge the
efficacy of the CRA and its implementing regulations. The CRA was enacted to
encourage covered banks to extend credit in their communities, particularly
low- and moderate-income neighborhoods. One way banks have sought to mitigate
regulators’ concerns over CRA compliance has been by entering into agreements
with community groups on CBPs.”
Congress
passed legislation in 1999 requiring banks and nongovernmental entities to fully
disclose any agreements to the public, but banking regulators have since
adopted regulations that allow banks and community groups to hide details of
their CRA-related agreements.
“This
circumvention of congressional intent is egregious in its own right, but the
growth in prevalence and dollar value of CBPs in recent years only underscores
the need to update the regulations implementing the GLBA’s CRA sunshine
provision,”
Senator Toomey wrote, noting one recent agreement equaled $100 billion.
Ranking
Member Toomey concluded by urging federal banking regulators to revise their
regulations in order to provide meaningful transparency.
“As
your agencies seek to finalize recently proposed updates to the regulations
implementing the CRA—an explicit objective of which is to ‘promote transparency
and public engagement’—I urge you to establish a public, searchable database on
the agencies’ websites containing all CRA-related agreements in full, including
CBPs, and provide comprehensive data on such agreements. In addition, I urge
you to broaden the definition of ‘covered agreement’ under the regulations to
align with congressional intent and mitigate the potential for evasion by banks
and community groups.”
To
read the full letter to the Fed, OCC, and FDIC, click here.
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