LUDWIG ON CRA REVAMP, BANK-FINTECH SCRUTINY, AND CRYPTO′S FUTURE BY ROB BLACKWELL, Chief Content Officer and Head of External Affairs, IntraFi Bankers aren’t exactly thrilled with the current proposal to reform the Community Reinvestment Act. They’ve publicly criticized much of it, from the examinations that would likely become more stringent; to online lending changes that could harm low- and moderate-income communities; to the timeline for finalizing and implementing the rule. Trade groups have even warned about filing a lawsuit if the proposal is passed in its current form. To better understand the proposal and how it could be modified to better suit the industry, I sat down with Eugene Ludwig for an episode of Banking with Interest. Gene led the last successful effort to reform the CRA as comptroller of the currency under President Clinton. He explains why the current proposal should be reproposed — and dramatically simplified. He also talks crypto, how to prepare for a possible recession, and more. What follows are highlights of our conversation, edited for length and clarity. What’s your view of the current CRA reform proposal? It’s well-intentioned, but long, complex, and hard to understand. It should be simplified materially and kept broad. This is a complex country, and different geographic areas need different forms of assistance. A one-size-fits-all approach won’t work. Another issue is that CRA is oriented toward good economic times. But institutions face difficult circumstances all the time that aren’t their fault. Additionally, low- and moderate-income communities typically have more problems in bad times than other communities, and they emerge from those bad times more slowly. Bankers should get credit for assisting during these periods (and for anticipating them). Under the current law, they don’t. Some industry players are so angry about the proposal, they’ve threatened to file a lawsuit. It’s tragic. Regulators take pride in what they do — these are good people — but when you bring the OCC, Fed, and FDIC together, each agency has its own proposal. Then they start to negotiate, and before long each agency needs to accept the other agencies’ proposals if it wants the others to accept theirs. So they end up mashing three proposals together. When I was comptroller, I simply called Larry Lindsey at the Federal Reserve and invited him to my office to write the rule. When we were done, we had a rule that was relatively brief and easy to comprehend. The current proposal seems like an attempt to give everybody what they want, but it’s too long and complex. Do you think they need to repropose it? I do. utah.bank 16
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