Summary: Pursuant to a congressional request, GAO reviewed the proposed Community Reinvestment Act (CRA) regulations released for public comment. GAO found that: (1) the proposed CRA regulations focus on financial institutions' performance in lending, investing, and servicing their communities, particularly in low- and moderate-income areas; (2) it is unclear whether the proposed performance-based assessment standards will achieve the desired goals of improving bank performance and promoting consistency while minimizing compliance burdens; (3) the strengths of the proposed regulations include the focus on performance, an alternative standard for nonretail institutions, greater public disclosure, relief from burdensome documentation, the CRA plan option, and clarification of enforcement policy; (4) areas of concern about the proposed regulations include their uncertain impact on bank performance, the workability of the market share test, examiner discretion and consistency, documentation burden, data quality and collection, examiner workload, and regulation implementation; and (5) regulatory agencies need to address public concerns about the proposed CRA regulations and accomplish certain tasks to ensure effective implementation of the regulations.
