President Donald Trump’s administration is attempting to change federal rules that force banks to lend to poor and insolvent borrowers, by rolling back the “Community Reinvestment Act” of 1977.
Community groups have come out in support of the law as written and expressed concern that any interference may limit access to loans for poorer applicants, according to The Wall Street Journal.
The Treasury Department is planning to release recommendations to change the law in early 2018, The WSJ reports. Banks believe new changes to the law would grant them more flexibility and ultimately improve the way they do business.
Comptroller of the Currency Joseph Otting spoke with The WSJ and said: “Community groups don’t like the way [Community Reinvestment Act] is today, the banks don’t like the way CRA is today, and regulators don’t like it.”
The Treasury isn’t expected to push for a full repeal of the law, but they are looking to streamline and modernize the regulations in an effort to guarantee efficiency and solvent lending practices.
The actual reforms are still being debated, but one of the primary changes being considered is to stop forcing banks to focus on low-income areas and allow them to invest in a more diverse portfolio of endeavors.
The American Bankers Association has requested infrastructure be included within the “community development” definition, to help those in the middle class as well as the poorer neighborhoods, The WSJ reports.
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