The Federal Reserve, along with the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC), have announced a 36-month extension that aims to give favorable consideration under the Community Reinvestment Act (CRA) for bank activities targeted at revitalizing and stabilizing areas in Puerto Rico and the U.S. Virgin Islands, areas significantly impacted by Hurricane Maria. According to Orrick, Herrington & Sutcliffe LLP.
This extension focuses on the role of banking institutions in the recovery and revitalization efforts in the wake of natural disasters. By incentivizing robust financial support through the CRA, the agencies aim to boost the recovery process by making funds more accessible to those who need it the most. This comes as a part of an ongoing initiative to keep financial lifeblood flowing into sections of the countries that have experienced devastation due to natural disasters.
The CRA, which was enacted in 1977, seeks to address the deterioration of credit services in lower-income neighborhoods by obligating banks to meet the credit needs of all communities they serve, including low- and moderate-income neighborhoods, consistent with prudent banking practices.
The decision to extend favorable consideration under the CRA in areas impacted by Hurricane Maria further highlights the increasing recognition among regulators of the role of financial institutions in responding to the consequences of natural disasters. This kind of strategic involving banks in disaster recovery may help relieve some of the burden from government agencies, allowing for more immediate, flexible and context-specific responses to ongoing crises.