Consumer Affairs Letters
Second Extension of CRA Consideration Period for Community Development Activities in Hurricanes Rita and Katrina Disaster Areas for an Additional 36 Months
AND COMMUNITY AFFAIRS
|SUBJECT:||Second Extension of CRA Consideration Period for Community Development Activities in Hurricanes Rita and Katrina Disaster Areas for an Additional 36 Months|
The regulations implementing CRA allow examiners to give favorable consideration to activities that meet the definition of “community development,” including loans, investments and services that help to revitalize or stabilize designated disaster areas. Moreover, the Interagency CRA Question and Answer guidance specifically states that financial institutions may receive favorable consideration for community development activities related to the damage in designated disaster areas for 36 months following the date of designation by the federal government. This 36-month time period may be extended by the agencies to assist in long-term recovery efforts where there is a demonstrable community need.
Federal Reserve staff has determined that there continues to be a demonstrable community need sufficient to warrant an extension of CRA consideration for state member banks’ community development activities related to Hurricanes Katrina and Rita. This determination is based on FEMA’s continued designation of these areas as active disaster areas and CRA’s role in assisting long-term recovery efforts in these Gulf Coast areas 2. Consequently, examiners should continue to provide CRA consideration for community development loans, investments, and services that revitalize or stabilize the areas designated as disaster areas subsequent to Hurricanes Katrina and Rita for an additional 36 months. The other banking regulatory agencies with CRA responsibilities are taking identical action 3.
Examiners are also reminded that state member banks located outside the designated disaster areas may continue to receive favorable CRA consideration for community development activities that help to revitalize or stabilize the designated disaster areas related to Hurricanes Katrina and Rita, provided that the state member bank has adequately met the CRA-related needs of their local communities
Please distribute copies of this letter to your examination staff for their immediate use. If you have any questions, please contact Celeste L. Anderson, Senior Supervisory Consumer Financial Service Analyst at 202-452-2677, or Paul Robin, Manager, Oversight and Policy Section at 202-452-3140.
Sandra F. Braunstein
Division of Consumer and Community Affairs
1. The initial 36-month period expired in 2008 and the Federal Reserve issued guidance extending, for an additional 36 months, the CRA consideration for state member banks’ activities in the Gulf Coast areas declared major disaster areas by the Federal Emergency Management Agency (FEMA) following Hurricanes Katrina and Rita in 2005. Return to text
2. We recognize that due to recent severe storms, areas of the Gulf Coast and elsewhere have been declared by FEMA as major disaster areas. This guidance only addresses the extension of CRA consideration for the Gulf Coast areas affected by Hurricanes Katrina and Rita. Disaster areas receive CRA consideration as provided in the CRA regulations and Questions and Answers, and will be reviewed on a case-by-case basis upon expiration of their initial 36-month designations to determine if further extensions are appropriate. Return to text
3. Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency. Return to text