Proposed Rule for Community Reinvestment Act Modernization Prioritizes Increasing Access to Capital and Credit for Indian Country

Published on Dec 19, 2019

WASHINGTON, D.C. | Late last week, the Office of the Comptroller of the Currency (OCC) and the Federal Insurance Deposit Corporation (FDIC) released their much-anticipated proposed rule to modernize the Community Reinvestment Act (CRA), a regulatory framework that features landmark provisions designed to incentivize increased access to capital and credit for tribal governments, communities, and citizens. 

Leading up to the release of the proposed rule, NCAI, the Native American Finance Officers Association, and our partners had closely engaged the OCC and FDIC for more than two years about how best to modernize the CRA so that it serves the unique challenges and needs of Indian Country. The CRA’s new regulatory framework addresses several major priorities outlined in NCAI’s comments on the OCC’s Advance Notice of Proposed Rulemaking, notably:

·         specific measures aimed at spurring investments in tribal public safety, housing, education, healthcare, and communications infrastructure, as well as other community and economic development projects on tribal lands;

·         providing banks with CRA credit for serving tribal communities even when Indian Country falls outside their CRA assessment areas; and

·         creating CRA scoring incentives for banks that choose to do business in Indian Country.

“The proposed rule to modernize the Community Reinvestment Act reflects the OCC and FDIC’s genuine commitment to heed Indian Country’s call for a modernized CRA that helps tribal nations build thriving economies and communities through increased access to capital and credit,” said Kevin J. Allis, Chief Executive Officer of the National Congress of American Indians. “It is a testament to the good that can come when the federal government fulfills its trust and treaty obligations to consult with tribal nations on a true government-to-government basis. We look forward to working with the OCC and FDIC to ensure the modernized CRA fulfills its intended promise for tribal communities.” 

The proposed CRA regulations would apply to federally insured depository institutions supervised by the FDIC and OCC, which conduct approximately 85 percent of all CRA-based activity. Comments will be accepted for 60 days after the rule’s publication in the Federal Register, which is pending. 

About the Community Reinvestment Act

The CRA was signed into law in 1977 to encourage depository institutions to help serve the credit needs of the communities in which they operate, in particular low- and moderate-income areas and populations. The Act also sought to deter discriminatory credit and lending practices against those populations, a practice commonly known as “redlining.” With many Indian reservations located in the poorest regions of the country, and with a significant portion of the Native population considered to have low or moderate incomes, on paper the CRA should have discernably enhanced the ability of Native people to access capital and credit through CRA-qualifying financial institutions. However, as the CDFI Fund’s landmark 2016 “Access to Capital and Credit in Native Communities” report noted, while the CRA “was not intended to exclude Native Communities living on tribal lands...in practice it often does,” and banks under the Act’s current regulations can easily satisfy CRA requirements “without working with a Native Community located on Native lands (communities which otherwise meet CRA criteria)” if they so choose. The modernized regulations feature several measures to address these issues.

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