Question: What happens if a bank receives a low CRA rating? How can the bank ensure that it is in compliance with the CRA?
Answer:
The FDIC has recently released the ratings received by state nonmember banks evaluated for compliance with the provisions of the Community Reinvestment Act (CRA). Banks do not receive monetary penalties for receiving a poor CRA rating; however, there are administrative penalties. For example, if the bank receives a poor CRA rating, regulatory agencies can deny applications for federal charters, mergers, acquisitions, etc. In addition, public disclosures of any bank's poor CRA rating can lead to undesirable publicity.
In order to maintain compliance with the CRA, the bank must:
Help meet community credit needs.
Undergo regulatory agencies' evaluations which rate the bank's efforts to fulfill the requirements of the CRA.
Maintain a public record of the CRA information.
Provide up-to-date and continuous training to educate bank employees on the CRA requirements.
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