In response to questions concerning community development activities in areas of Puerto Rico and the Virgin Islands which were damaged by Hurricane Maria, federal financial regulators issued a statement on Community Reinvestment Act (CRA) consideration.
Specifically, financial institutions have asked whether their community development activities assisting with the aftermath of the hurricane are eligible for CRA consideration even though the disaster areas are outside the institutions’ assessment areas.
The statement hopes to clarify that financial institutions located outside these disaster areas will receive consideration for community development activities that resulted from the hurricane as long as the institution has been responsive to the community development needs and opportunities of its own assessment areas.
The interagency statement from the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency notes that “community development” is defined in CRA regulations to include “activities that revitalize or stabilize designated disaster areas.”
The statement continues by nothing that CRA regulations recognize a bank may be able to meet community development needs of its assessment area(s) through activities that benefit a broader statewide or regional area that includes the bank’s assessment areas(s), even when the benefit to the assessment area(s) is not direct or immediate.
“Under these rules and interpretations, a financial institution will receive consideration for activities that help to revitalize or stabilize a designated disaster area that includes one or more of the bank’s delineated assessment areas,” the statement said.
Because Hurricane Maria caused devastation in areas not connected to the mainland, but which have effects that may extend to other parts of the nation, regulators determined favorable consideration was appropriate.
“Therefore, the agencies have determined that it is appropriate to give favorable consideration to community development activities that help to revitalize or stabilize the impact from the hurricane by financial institutions located anywhere in the nation, provided that they have been responsive to the community development needs and opportunities of their own assessment area(s),” the statement said. “Such activities may include assistance to people displaced by the hurricane, including evacuees relocated to other states.
“CRA consideration for activities that assist the disaster areas or affected individuals will be given regardless of the median income of the census tract or the personal income of the individual. However, the agencies may give greater weight to activities that are most responsive to community needs, including the needs of low- and-moderate-income areas and individuals.”