Today In Washington

January 11, 2018

Source: AEO Government Relations Team, Madison Services Group

Changes to CRA: A Proposal 

In the early part of this year, the Treasury Department is expected to propose major changes to the Community Reinvestment Act (CRA). The CRA, enacted in 1977, was designed to prevent redlining, a practice where banks would not lend in poor neighborhoods, and encourage banks to lend to the communities they operate within. Supporters of the law want the CRA to be expanded to include more low-income communities. Those in favor of reform argue the CRA has not kept up with technological advances, and results in penalties that are not related to the CRA at all. At issue is a test used to grade a bank’s compliance that includes the number of “community development” loans they provide to low-income communities and individuals, with bad grades resulting in restrictions on a bank’s activities. On December 20, 2017, Comptroller of the Currency Joseph Otting stated that he would like to circulate potential rule changes to regulators within 60 days, with a public comment period to follow after.  


H.R. 4743, the “Small Business 7(a) Lending Oversight Reform Act of 2018,” introduced by House Small Business Committee Chair Steve Chabot (R-OH). This bill is aimed at strengthening oversight to SBA’s 7(a) guaranty loan program and providing greater transparency to Congress about SBA’s oversight activities. It provides clarity to the “credit elsewhere test,” as well as transparency to 7(a) lenders working with small business borrowers, to ensure SBA is only backing loans to borrowers who are unable to get a loan through conventional lending. Additionally, the bill provides flexibility for the Administrator to increase the authorization cap of the program — with the consent of Congress — in order to prevent a shutdown of the program should it reach its cap. Senate Small Business & Entrepreneurship Committee Chair James Risch (R-ID) has introduced S. 2283, an identical companion bill in the upper chamber. A section-by-section of the bill can be found here.   

H.R. 4754, a bill “To amend the Small Business Act to provide prospective construction contractors with information about an agency's policies on the administration of change orders to allow such contractors to make informed business decisions regarding the pricing of bids or proposals,” introduced by Representative Don Bacon (R-NE). Text is not yet available.  

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