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#2227322 - 12/13/19 01:00 PM CRA Proposal Released
Adam Witmer Offline
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CRA
#2227347 - 12/13/19 05:29 PM Re: CRA Proposal Released Adam Witmer
TMatt87 Offline
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I'm 25 pages in and the changes seem massive, mostly in a good way.
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#2227427 - 12/16/19 02:16 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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I am going through it and outlining what is happening. The proposed changes are quite vast, some good, some more difficult.

I don't see anything that would help internet lenders, versus gatherers of deposits on the internet but I haven't gone through the whole thing. I have got quite far however with an eye out for that and see nothing.

I do see more work for ISBs and large banks to trade off for perhaps more clarity. It will be interesting to see the Fed's take. They said they were taking a wait and see attitude and hope to join in on the final proposal. I certainly hope they do!
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#2227438 - 12/16/19 03:29 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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The assessment area proposed changes are quite interesting including when you can change an assessment area. I am a bit puzzled by that so have pondering to do.
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#2227439 - 12/16/19 03:33 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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Also, banks cannot subdivide counties - a county or county equivalent (e.g., in Louisianna or Puerto Rico) is the smallest area in an AA:

"The proposal would allow a bank to change its assessment area delineation once during each evaluation period and would no longer permit a bank to adjust an assessment area’s boundaries to include only the portion of a political subdivision that it reasonably can be expected to serve. The proposal would, however, retain the requirements that a bank’s assessment areas must not reflect illegal discrimination or arbitrarily exclude low- or moderate-income geographies."
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#2227440 - 12/16/19 03:35 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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I am also interested in the timing of AA changes. It seems to encourage taking of an entire MSA if you might open new branches in the "evaluation period". I am making a list of questions. This could require a branching ouija board.
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#2227474 - 12/16/19 06:38 PM Re: CRA Proposal Released Kathleen O. Blanchard
TMatt87 Offline
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Originally Posted by Kathleen O. Blanchard
The assessment area proposed changes are quite interesting including when you can change an assessment area. I am a bit puzzled by that so have pondering to do.


I read the proposal to say that you are only allowed to change your AA once during an evaluation period. We are rapidly expanding our branch network, which is causing us to add counties to our AA once or twice a year. I'm not sure how to reconcile the requirement that you AA includes all your physical locations with the limitation of changing your AA only once per evaluation period.
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#2227479 - 12/16/19 07:10 PM Re: CRA Proposal Released TMatt87
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Rant Alert!!

In stead of hitting the "Reset" button on an aged concept "CRA", we get the usual conflated, confusing, non-sense from un-elected bureaucrats
that only serve to make our jobs (call it job security) difficult without adding anything of "real value" to the equation.

Its a concept that has seen it better days. They attempted to bring the rule into the 21st Century, but failed miserably. AAs are a thing of the past in today's electronic world and adding another 240 pages of fluff won't help things. Take a look at our forum here. The confusion on what constitutes a qualified investment, CDL or covered loan in staggering. Additional burdensome data reporting is what's in the cards.

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#2227511 - 12/17/19 06:04 AM Re: CRA Proposal Released TMatt87
Kathleen O. Blanchard Offline

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I agree re it makes no sense to limit AA changes to once per "evaluation period" - unless the intent is to limit branch expansion which makes no sense at all - or to force the largest AA possible to allow for expansion at least within MSAs. I have a note to comment on that as it is crazy.
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#2227512 - 12/17/19 06:06 AM Re: CRA Proposal Released ccman
Kathleen O. Blanchard Offline

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CRA does a lot of good, but this proposal is strange. Many confusing aspects to it and a lot more work.

And elected bureaucrats do no better, if not worse. But this NPR is odd to say the least.
Last edited by Kathleen O. Blanchard; 12/17/19 06:07 AM.
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#2227532 - 12/17/19 03:46 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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There are good changes proposed, such as recognizing manual labor as community development and other added CD activities, and expansion of distressed and underserved areas to include "banking deserts" in urban areas and apparent credit for more out of AA activities. This comes with more analysis and reporting and elimination of ISBs.
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#2227533 - 12/17/19 03:47 PM Re: CRA Proposal Released Adam Witmer
Kathleen O. Blanchard Offline

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Plus recognition of CD "hot spots" to encourage activity in "banking deserts". And obviously lots of new banking lingo to toss around.
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#2227551 - 12/17/19 04:41 PM Re: CRA Proposal Released Kathleen O. Blanchard
ccman Offline
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You raise some good points. In the final analysis, the industry's Call Reports would be a much easier barometer to measure the FIs efforts to serve its communities without adding additional burdensome data requirements. As for the elimination of ISBs, CRA would be better served if it
exempted small institutions of less than $10 billion. Take a look at the 2018 data just released. Wow, what new revelations revealed in this mountain of data collected for what purpose that's mostly of no use to other than the gov't (not a lot of difference than HMDA, another bureaucratic nightmare). Agree that the congress of late has subjugated its responsibility to these agencies and are no longer representative of the we the people. After 42 years of banking, its time for some changes for the better! I think we can all agree on that.

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#2228059 - 12/28/19 02:48 PM Re: CRA Proposal Released Adam Witmer
Rocky P Offline
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Florida
Just to add my 2 cents in, especially about the county-wide assessment areas.

As a point, I'm not a CRA person - I'll leave that to Kathleen and Len. I get involved with it, because fair lending exams are usually done in conjunction with the CRA exam. While CRA looks at LMI areas, Fair Lending looks at discrimination, and for redlining, Majority Minority ("MM") tracts. (I'm trying to simplify - it's more involved, but for a different venue.).

Generally, CRA looks at where the loans are made, Fair Lending looks at the areas where they are not made.

Many, especially community banks attempt to serve the areas they get their deposits from. If branches are clustered, their effective influence area is limited. Forcing these banks to incorporate whole counties, especially if there are Majority-Minority tracts in the county, but substantially outside of their market/deposit area will be forcing them to serve areas for which they are ill equipped, and ill prepared.

Duval County (Jacksonville, FL) for example has 918 square miles. A community bank on the outskirts would be required to take the county, although parts would be over 50 miles away. The current way regulators look at redlining would be to identify the MM tracts and look at lending. There would be neither the marketing, infrastructure or expertise to realistically serve the areas. While this would not usually be an issue for multi-nationals or super regionals, it could be the difference as to whether a community bank can survive. (Or a bank in LA, where 1700 of the 2300 tracts are MM.)

There is a lot to read, and clarify, but for smaller banks, it may be an issue.
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