Impending Changes to CRA & imminent publication of Dodd-Frank Section 1071 Rule
In Podcast 49, Dean Stockford and Len Suzio discuss the impending changes to the Community Reinvestment Act (CRA) and the imminent publication of the Dodd-Frank Section 1071 Rule. The CRA Rule's publication date remains uncertain, while the Consumer Financial Protection Bureau (CFPB) is under court order to publish the Section 1071 Rule by March 31. Len notes that the 1071 Rule, which will have profound implications for the financial services industry, has been 15 months in the making and is expected to be quite controversial. Unlike CRA, Section 1071 is a reporting mandate, much like the Home Mortgage Disclosure Act (HMDA) regulations, and will be used for both fair lending and CRA purposes. Data collection and reporting requirements under Section 1071 will be more onerous than those under CRA, and it will cover a larger number of institutions.
Len expects the final 1071 Rule to be almost identical to the proposed rule, which will be challenging for banks and other financial institutions. As for the CRA rule, its finalization could be delayed for several reasons, including the many comments and criticisms received and potential legal action by the banking community. Furthermore, the prudential regulators may be waiting to see what Section 1071 looks like, as it will have a significant impact on CRA regulations. Len believes the final CRA rule won't be published until sometime late in the spring, but nothing would surprise him. Both Dean and Len plan to collaborate on an education series to help financial institutions understand the implications and requirements of Section 1071 and the new CRA Rule after their publication.