#2022-22, August 5, 2022

Association Submits Comments on Proposed Changes to CRA

In a comment letter filed today, the Association highlighted several issues and raised concerns with some of the proposed changes to the Community Reinvestment Act (CRA).  The joint regulatory proposal, which was issued earlier this year, is the first comprehensive rewrite of the CRA regulations in more than two decades.

MBA’s letter notes that the banking industry in Massachusetts has, “long advocated for comprehensive updates and modernization to the implementing regulations of CRA” and that, “The outdated regulatory framework does not properly address the significant impact that technology has had on lending, the delivery of financial products and services, and the needs of today’s consumers.”  It also generally supports the proposed requirement that the regulators publish a list of approved community development activities that qualify for CRA credit while also calling on the agencies to initiate an approval process for new qualifying activities.

In addition, the Association raised several concerns with the proposal, noting that the definitions and requirements for assessment areas, in particular the focus on including entire counties in an institution’s assessment area.  The letter notes that, “a physical footprint inside Middlesex County wouldn’t necessitate pervasive CRA activity throughout the entire county, for instance.  Middlesex County includes approximately 1.614 million people, and it remains unreasonable for our members to map an assessment area that includes this entire county simply because they have a branch at the southern tip of the county in Somerville.”

Our letter also strongly supports a lengthy implementation timeline for revised CRA rules when they are finalized and addresses potential inconsistencies between state and federal CRA requirements in the Commonwealth.  In addition to submitting our own comments, MBA also joined with state bankers associations from around the nation on a joint comment letter with the American Bankers Association.  The joint letter calls on the agencies to re-open the comment period and fully explain their policy choices; simplify the highly complex, formulaic system of metrics, benchmarks, multipliers, and thresholds; and provide a minimum two-year implementation period.

To read MBA’s comment letter, click here.

FDIC Issues Advisory for Banks Regarding Deposit Insurance and Crypto

Late last week, the Federal Deposit Insurance Corporation (FDIC) issued an advisory to banks regarding alleged misrepresentations by some cryptocurrency companies that their products are eligible for FDIC deposit insurance coverage or that customers are FDIC-insured if the crypto company fails.

The advisory notes that, “Over the past several months, some crypto companies have suspended withdrawals or halted operations. In some cases, these companies have represented to their customers that their products are eligible for FDIC deposit insurance coverage, which may lead customers to believe, mistakenly, that their money or investments are safe.”  The agency also said that banks dealing with crypto companies, “should confirm and monitor that these companies do not misrepresent the availability of deposit insurance.”

In addition to the advisory, the FDIC issued a two-page fact sheet reminding the public that the FDIC only insures deposits held in insured banks and savings associations and only in the event of an insured bank’s failure.

To read more, click here.

Regulators Propose Updates to Statement on CRE Loan Accommodations

The FDIC, Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA) recently issued a request for comments on a revised policy statement regarding accommodations and workouts for commercial real estate loans whose borrowers are experiencing financial difficulty. The policy statement was originally issued in 2009.

The updates include the following changes: a new section on short-term loan accommodations, information about changes in accounting principles since 2009, and revisions and additions to examples of CRE loan workouts.  In addition, the revisions emphasize the importance of collaborating constructively with borrowers facing financial difficulties and discuss supervisory expectations regarding CRE loan accommodations and workouts.

Comments on the proposal are due 60 days after publication in the Federal Register.

To read more, click here.