In comments submitted to the Office of the Comptroller of the Currency (OCC), Charity & Security Network urges the agency to use the Community Reinvestment Act (CRA) as a vehicle for incentivizing banks to provide financial services to nonprofit organizations (NPOs).
The comments were submitted in response to an Advance Notice of Proposed Rulemaking (ANPR) published by the OCC on September 5, which announced the agency’s intention to build a new framework to transform or modernize the regulations that implement the CRA (83 FR 45053). A new framework, the agency said, would “help regulated financial institutions more effectively serve the convenience and needs of their communities by encouraging more lending, investment, and activity where it is needed most.”
In its comments, C&SN asserts that the CRA definition of “community” should be interpreted as any area tied to the bank’s overarching business operations, whether from a branch, ATM location or via its digital or electronic services, and that should include areas outside the U.S. The comments argue that in the age of electronic banking, a bank’s footprint is now global and its community is any area it reaches with its services. In the case of banks that serve a correspondent function for international wire transfers, “the notion of a global footprint takes on even more relevance,” the comments state.
The CRA already gives credit for certain bank services provided to certain types of NPOs. For example, the current regulatory framework has allowed banks to receive credit for providing technical assistance on financial matters to NPOs serving low and moderate-income housing or economic revitalization and development needs. However, this framework as it relates to NPOs is incomplete in two respects. First, the types of NPOs that a bank can receive credit for working with is quite limited. Generally, these include those with a community development purpose or those “with a defined mission of serving low- and moderate-income persons.” Second, and perhaps more importantly, the types of services rendered to NPOs that may receive credit under the CRA are also limited. They include primarily investments, loans, provision of technical assistance on financial matters and financial counseling.
C&SN urges the OCC to broaden the types of financial services offered to NPOs for purposes of receiving credit under the CRA. “Although the CRA gives credit for certain bank services provided to certain types of NPOs, these services are incomplete if NPOs lack the financial services necessary to carry out their important programs,” the comments state. For example, technical assistance to a humanitarian aid NPO on financial matters is irrelevant if the NPO has to shut down programs abroad because it cannot successfully make the international wire transfers necessary to fund its programs, the comments explain. “It is necessary to incentivize banks to provide the vital services to NPOs that enable them to do their work. The CRA offers such a vehicle,” the comments assert.