The Community Reinvestment Act (CRA) encourages regulated financial institutions to help meet the credit needs of the communities in which they are chartered, including low- and moderate-income neighborhoods, consistent with safe and sound operations of the institution. CRA requires the agencies that supervise banks—the OCC, the FDIC, and the Fed—to periodically evaluate a financial institution’s record of meeting the credit needs of its entire community and to assign a CRA rating. Among the factors on which large banks are evaluated for CRA performance are their provision of community development loans, investments, and services.
Recently, the agencies issued “Interagency Questions and Answers Regarding Community Reinvestment” (Q&As), which provided new and revised guidance interpreting the agencies’ CRA regulations, including explaining the types of community development lending and investments that may receive CRA consideration.
The CRA regulations define community development to include activities that revitalize or stabilize particular areas. The Q&As explain that activities revitalize or stabilize an underserved nonmetropolitan middle-income geography if they help to meet essential community needs, including needs of low- or moderate-income individuals. Activities, such as financing for the construction, expansion, improvement, maintenance, or operation of essential infrastructure or facilities for health services, education, public safety, public services, industrial parks, affordable housing, or communication services, will be evaluated under these criteria to determine if they qualify for revitalization or stabilization consideration.
Increasingly, the availability of broadband is essential to access banking services, particularly as financial institutions shift away from branch-based delivery systems. Currently, consumers and small businesses in many rural and tribal areas may not have reliable access to Internet-based alternative delivery systems for banking services because they do not have access to broadband service. In addition, improved broadband access supports economic development, as small businesses and farms increasingly use broadband-reliant technologies for payment processing systems, remote deposit capture, to access credit facilities, and to market and arrange delivery of products.
To address this, the Agencies revised their existing guidance by adding a new example involving communication infrastructure as an activity that would be considered to “revitalize or stabilize” an underserved nonmetropolitan middle-income geography.  Revised Q&A § __.12(g)(4)(iii) – 4 now includes the following example of a project that would qualify as meeting essential community needs, including needs of low- or moderate-income individuals:
· a new or rehabilitated communications infrastructure, such as broadband internet service, that serves the community, including low- and moderate-income residents.
This Q&A cautions, however, that financing a project that connects services to a middle- or upper-income housing development while bypassing a low- or moderate-income development that also needs the services, generally would not qualify for revitalization or stabilization consideration in geographies designated as underserved. However, if an underserved geography is also designated as distressed or a disaster area, additional activities may be considered to revitalize or stabilize the geography, as explained in Q&As § __.12(g)(4)(ii) – 2 and § __.12(g)(4)(iii) – 3.
For additional information, please contact Sharon Canavan at sharon.canavan or (202) 649-6420.
Director, External Affairs
National Telecommunications and Information Administration
U.S. Department of Commerce