A proposal to redesign the Community Reinvestment Act passed a Federal Deposit Insurance Corp. board vote 3-1, though tempers flared during the meeting.
The proposed rule would create an entirely new framework for banks to provide banking services to low-income neighborhoods and distressed communities.
It passed earlier in the day at the Office of the Comptroller of the Currency, which has only one director. At a highly anticipated board meeting of the FDIC, the proposal passed with a single dissent from former FDIC Chairman Martin Gruenberg, who also sits on the board of the agency.
Gruenberg's dissent centered on the proposed idea of using a single metric to measure CRA activity. Gruenberg said adding up the dollar value of qualifying CRA activities into a single metric would undermine the evaluation of the bank's performance in each area.
"It is a 'count-the-widgets' approach that does not take into account the quality and character of the bank's activities and its responsiveness to local needs," Gruenberg said in prepared remarks.
But FDIC Chair Jelena McWilliams praised the rule for clarifying what banking activities count as well as how assessment areas are evaluated in modern banking.
McWilliams also pointed out that small banks with $500 million or less in assets could opt in under the rules or continue to be evaluated under current regulations.
"The proposal will preserve the aspects of the regulations that are working well while updating outdated components and providing much-needed clarity to financial institutions, resulting in an improved framework that will benefit [low- and moderate-income] communities across the nation," McWilliams said.