Today, March 28, the regulators announced what many have been anticipating. The Agencies issued a press release indicating they intend to rescind the 2023 CRA rule. This is a good thing because the 2023 CRA rule was filled with some very bad ideas, including unrealistic assessment areas, the omission of loans important to the community, and an unbelievably complex performance rating system.
This does not mean that the legacy rule doesn't need some improvements that will benefit everyone. All regulatory compliance officers should consider submitting testimony in response to the NPR when it is announced, about the incredible burdens imposed by the 2023 CRA rule, because it will be important to counter the adverse publicity that the mainstream media is likely to use to characterize this decision. Leftwing activists will scream about how the rescission will hurt consumers and small businesses (even though it doesn't).
At the same time, bankers may want to put forward ideas about how the CRA can be improved with minimal tweaks for everyone's benefit. For example, I like the idea of a performance rating system that removes any doubt about what is needed to ensure satisfactory performance. In the next few weeks I intend to publish articles about what was bad in the 2023 CRA and what simple tweaks could be done to improve the legacy CRA.
By the way, Section 1071 is still in effect and will have implications for the CRA, even the legacy CRA, when it is restored. More about that in future articles.
So it may be time for some celebration by bankers, but don't let your guard down. As Yogi Berra said "It ain't over till it's over".
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