September 08, 2022

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.