FRB: Consumer Affairs Letter CA 98 - 5 - Policy for providing written guidance to the industry and the public on the Community Reinvestment Act (CRA) regulation

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS AND COMMUNITY AFFAIRS OFFICERS:

SUBJECT: Policy for providing written guidance to the industry and the public on the Community Reinvestment Act (CRA) regulation

Since the new CRA regulations were published in 1995, the agencies have been providing guidance to the industry and the public through several means, including by issuing interagency staff letters. The agencies’ staffs recently decided that responding to individual inquiries with an individualized written response is neither efficient nor effective. Consequently, going forward, the agencies’ staffs will be using a new regime for issuing guidance.

First, if a written inquiry raises a new, substantive, or critical issue that has not been addressed authoritatively elsewhere, the agencies’ staffs will consider including a response to it in the interagency staff question and answer (Q&A) document, and will so inform the inquirer. In this way, we hope to be able to address these issues in a general way, rather than to appear to endorse a particular inquirer’s program or product, which has been a concern with respect to the letters issued to date, despite efforts to avoid doing so. Second, other written inquiries not falling in the first category will be answered primarily by telephone, but in some cases in a single-agency written response that simply directs the inquirer to the existing guidance (e.g., the Q&As, other letters, the regulation) that may be relevant. Obviously, there may be circumstances in which questions may arise regarding which of the above categories a particular inquiry falls into and those questions will be resolved through interagency consultation. The agencies’ staffs agreed, as well, that in the event an issue is raised of particular importance, the answer to which cannot wait until the next issuance of the Q&A document, the agency staffs will consider issuing an interagency letter. It was agreed, however, that this would be the extremely rare case.

By this letter, I am informing you of this change in practice and am asking for your assistance in assuring its success. I know that the Reserve Banks’ staffs have been doing a great deal of work with the industry, and the public more generally, to supply guidance regarding this regulation. Those efforts have been greatly appreciated. However, consistent implementation of this regulation, both within and among the agencies, is essential, particularly with respect to written guidance. Reserve Bank staff who answer written inquiries regarding CRA from the public should be aware of this new approach and avoid answering questions of the first sort in writing in a way that may appear to establish policy for all the agencies. Telephone and in-person discussions of these issues, as always, continue to be appropriate. However, even with respect to them, care should be taken not to appear definitive in those circumstances in which interagency policy has not been established. Any such issues that arise should be discussed with members of this Division’s staff for possible inclusion in the interagency Q&A document. Any suggestions regarding how such issues should be resolved, including suggested wording for the Q&A document, would be welcome. Written questions of the second sort should be answered primarily by telephone. Any written responses to them should simply direct the inquirer to controlling authority already in existence.

It is understood that examiners will, in the normal course, produce written public evaluations that address particular activities and reach conclusions concerning their impact on an institution’s record. Clearly, that should continue, since a fundamental aspect of this regulation is that examiners will use their judgment, putting activities into the context of the institution being examined, to reach a conclusion about the institution’s record. We understand that examiners have relied on the interagency letter guidance in the past to help them make judgments in particular cases. The letter guidance already issued will continue to exist. However, the agencies are considering putting the guidance contained in some of those letters in the Q&A document in a more general form. The agencies will also continue to produce guidance tailored for and directed to examiners in training and other media. Consequently, in these ways we hope to be able to provide the guidance the examiners will need without continuing the practice of answering detailed questions about particular programs in ways that do not further policy development.

If you have any questions, please contact me at (202) 452-3585 or Christina Nejezchleb at (202) 452-2705.