CRA Modernization and Indian Country: Bank Agencies Seek Comments on New Regulatory Proposal

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a Notice of Proposed Rulemaking (NPR) to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) . The proposal updates how ARC activities qualify, where ARC activities are considered, and how ARC activities are assessed. It aims to address significant changes in the banking industry since the last major CRA updates in 1995 and 2005.

The proposal includes provisions tailored to the unique needs of Indigenous communities. These provisions reflect feedback that stakeholders provided during engagement meetings and roundtables convened by personnel from across the Federal Reserve System, including Center for Indian Country Development personnel, and in the comment letters submitted in response to previous agency proposals. To ensure that the ARC modernization process continues to reflect the needs of stakeholders, the three bank branches are now seeking additional feedback on a number of points, including the following issues affecting Indian Country.

Define Indigenous land areas to attract banking community development activities

ARC encourages banks to conduct certain community development activities in designated geographic areas. However, the current regulations do not include a precise definition for certain community development activities in indigenous territories. In the NPR, the agencies propose to define Indigenous land areas to include the following geographic areas: Indian Country, Lands Held in Trust by the United States for Native Americans, State Indian Reservations, Alaska Native Villages, Hawaiian Lands, Alaska Native Village Statistical Areas, Areas Oklahoma Tribal Statistics, Tribal Designated Statistical Areas, American Indian Joint Use Areas, and State Designated Tribal Statistical Areas.

This geographic definition is broader than the legal definition of indian country and also includes areas generally considered by the Bureau of Indian Affairs and the United States Census Bureau to be Indigenous geographies. The three bank branches are seeking feedback from stakeholders on the following question (numbered as it appears in the RNP):

Q28: To what extent does the proposed definition of Indigenous land areas including geographic areas with indigenous and tribal community development needs?

Define eligible community development activities for the benefit of indigenous territories

To help address the unique challenges of Native Land Areas, the agencies propose creating a definition of eligible community development activities that are targeted and conducted in these geographies, including:

  • Revitalization activities in indigenous areas,
  • Essential community facilities in areas of indigenous lands,
  • Essential community infrastructure in areas of Indigenous lands, and
  • Disaster preparedness and climate resilience activities in indigenous areas.

To be considered an eligible community development activity, critical community facilities, critical community infrastructure, and disaster preparedness and climate resilience activities in Indigenous Lands areas must:

  • To benefit or serve residents, including low- and moderate-income residents of Indigenous Land Areas,
  • Do not displace or exclude low- or moderate-income residents, and
  • Work in conjunction with a federal, state, local, or tribal government plan, program, or initiative that benefits or serves residents of Indigenous Lands areas, and does not displace or exclude low- or moderate-income residents of those geographic areas .

Note that in addition to these place-based community development activities, other community development activities, such as affordable housing or economic development, could also be considered in Indigenous areas, provided they otherwise meet the eligibility requirements for those specific activities.

Separately, the three bank agencies propose that revitalization activities in indigenous land areas have a more specific focus on low and middle income people. For example, a bank’s purchase of a bond to fund an industrial revitalization project in an area of ​​Indigenous lands would qualify for consideration. if the majority of employment opportunities created by the project benefited low- to middle-income residents and the activity met other required criteria. Revitalization activities must also be undertaken in conjunction with a federal, state, local, or tribal government plan, program, or initiative with an explicit focus on revitalizing or stabilizing areas of Indigenous lands and a particular focus on households. low or moderate income.

In this context, the agencies are seeking feedback from stakeholders on the following two questions:

Q29. In addition to the proposed criteria, should agencies consider additional eligibility criteria for activities in areas of Indigenous lands to ensure that a community development activity benefits low- and middle-income residents who reside in areas of indigenous lands?

Q30. Should agencies also consider activities in areas of Indigenous lands undertaken in conjunction with plans, programs or initiatives of tribal associations or tribal appointees, in addition to the proposed criteria for considering activities in conjunction with federal, state, local, or tribal government plans, programs, or initiatives?

Review of the impact of community development activities

Under current regulations and guidelines, examiners at the three bank branches examine both the quantitative and qualitative aspects of a bank’s community development activities to determine whether these activities are innovative, complex and meet identified community needs. However, without clear standards for measuring innovation, complexity, or responsiveness, assessment relies heavily on the judgment of the reviewer. As a remedy, the agencies offer a list of impact evaluation factors for the qualitative evaluation of community development activities.* Compared to current practice, the integration of specific impact review factors into the qualitative assessment aims to create a more standardized review approach and therefore encourage banks to pursue activities that have a high degree of impact and responsiveness to the needs of low- and moderate-income people. communities.

To recognize the unique status, credit needs and community development needs of indigenous and tribal communities, the agencies propose to use qualifying community development activities in areas of indigenous lands as an impact review factor. In addition, the agencies propose that eligible community development activities that benefit Indigenous territories and meet other eligibility criteria be considered under this impact review factor. For example, an affordable housing project that serves an area of ​​Indigenous lands or an activity in an area of ​​Indigenous lands undertaken with a community development financial institution would be included in this impact review factor.

The agencies are seeking feedback from stakeholders on the following related question:

Q38. For the proposed factor to refer to activities that benefit or serve indigenous communities, should the factor be defined to include activities that benefit indigenous and tribal communities that are not located in areas of indigenous lands? If so, how should agencies consider defining activities that benefit indigenous and tribal communities outside areas of indigenous lands?

How to comment on these issues

The agencies are seeking feedback on the current proposal to help them refine the provisions to better serve low- and moderate-income communities. To provide feedback on the matters detailed here, or any other issue addressed in the NPR, submit a written comment no later than August 5, 2022. A comment submission link and additional information about the NPR publication are available at the Federal Reserve. Boards website.


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