Forty-five years ago, Congress passed the Community Reinvestment Act to encourage banks to expand lending in poor and underserved areas in a full-scale effort to help eliminate redlining, a discriminatory practice where banks and insurance companies did not fully support Black and minority communities.
In essence, white neighborhoods were treated more favorably than minority areas. CRA was an effort to bring equal treatment in lending practices.
The act was last updated nearly 30 years ago, in 1995.
Financial institutions were required to report on lending in poorer areas and regulators were given the ability to reject expansions or mergers for banks that were out of compliance with CRA mandates.
Now, the nation's chief regulatory agencies are asking Arkansas lenders and others across the nation for input to potentially overhaul CRA.
Comments are due to regulators by Aug. 5. The comprehensive review includes the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
State bankers are fairly tight-lipped about the initiative, noting they just received the 678-page proposal a month ago and need time to review. "It's going to take time and resources that we don't have devoted to something like this right now to give any kind of input or make recommendations," said a key executive at one of Arkansas' largest banks.
FDIC Acting Chairman Martin Gruenberg, in comments May 5 as the rulemaking proposal was issued, said that the examination will strengthen and modernize CRA regulations. "This has been an ambitious undertaking," he said. "The changes to CRA being proposed are substantial."
The initiative aims to expand the scope and bring a more rigorous analysis to CRA efforts by lenders.
In announcing the review, the federal agencies outlined four primary areas for improvement:
• Expanded access to credit, investment and basic banking services in low- and moderate-income communities.
• Updated rules related to online and mobile banking and branchless banking.
• Development of a metrics-based evaluation of retail lending and community development financing.
• Recognition of the difference in bank size and business models to more effectively evaluate their adherence to CRA rules. Smaller banks, for example, would be evaluated differently than banks with $10 billion or more in assets.
CRA was implemented and revised in a banking environment that relied on branches to serve distinct communities. Today, the lending world is more flexible and banks make loans where they do not have a branch. Digital and online banking are transforming lending practices. Today, bank lending in communities where there is no local bank branch is generally not subject to CRA rules and reviews.
Overall, Gruenberg noted the effort "represents a major revision of CRA intended to strengthen its impact and increase its transparency and predictability."
GROW ON YOUR OWN
Are you a small to mid-sized business interested in selling your products abroad?
Arkansas Manufacturing Solutions is sponsoring a seminar on June 22 to help with the effort. The "Grow Your Exports: A Virtual Exporting Bootcamp" is being held in two sessions in conjunction with the Arkansas District Export Council.
Sessions are geared to support businesses that are new to exporting products as well as existing Arkansas exporters. The free course provides five hours of training to bolster exporting with a focus on developing customer relationships, international logistics, managing payment and finance efforts, and an exploration of regulations and legal issues that exporters face.
Virtual sessions are scheduled from 9-11:30 a.m. and from 1-4:30 p.m. Details and registration information are available at exportarkansas.org.
HELP FOR VET-OWNED BUSINESSES
The U.S. Small Business Administration will hold a day-long workshop June 7 in Fort Smith to provide entrepreneurship training and support for military veterans and their spouses.
The Boots to Business Reboot program is an education initiative that provides an overview of entrepreneurship and business ownership fundamentals to veterans of all eras. Active-duty service members, including National Guard and Reserve, and spouses are eligible to participate.
Veterans will gain access to resources they need to launch a business, develop a business plan and receive information on SBA programs available to help.
The course will begin at 7:45 a.m. at 70 S. 7th St. in Fort Smith. More information is available at sba.gov/ar.
ARKANSAS-BASED BUSINESSES WANTED
The Conductor, a Conway entrepreneurial support organization, has opened the application process for its 10X Growth Accelerator, which targets high-potential technology and technology-enabled businesses based in Arkansas.
The program offers participants a growth-oriented curriculum that includes management assistance, access to capital, networking opportunities and links to customers. The curriculum includes weekly topics that focus on leadership, sales processes and scalability.
Participants must commit to having at least one C-level executive who can attend meetings and workshops during the 14-week program that beings Aug. 9.
Arkansas companies with annual revenues from $100,000 to $10 million are eligible.
More information is available by contacting program director Glenn Crockett at Glenn@ARConductor.org.