Question 17
Due to the economic distress caused by the COVID-19 pandemic, some banks have been:
- (a) waiving withdrawal penalties on certificates of deposit (CDs);
- (b) fulfilling early distribution requests regarding individual retirement accounts (IRAs);
- (c) allowing draws on home equity lines of credit (HELOCs) during the repayment periods;
- (d) increasing transaction limits;
- (e) eliminating overdraft fees; and
- (f) eliminating ATM fees.
Will CRA community development service credit be given for these types of actions during the pandemic? How should banks document these activities and the number of customers served by them? (new FAQ added March 8, 2021)
Response 17
The Joint Statement on CRA Consideration for Activities in Response to COVID-19 (Joint Statement) on March 19, 2020, explains that the agencies will provide favorable CRA consideration to retail banking services and retail lending activities in a bank’s assessment area(s) that are responsive to the needs of low- and moderate-income individuals, small businesses, and small farms affected by the pandemic and that are consistent with safe and sound banking practices. The Community Reinvestment Act (CRA) Consideration for Activities in Response to the Coronavirus Frequently Asked Questions (FAQs) include additional examples of such activities.
The waiving of ATM fees, overdraft fees, and early withdrawal penalties on CDs are examples of retail services considered responsive to the needs of low- and moderate-income individuals as explained in the Joint Statement. The waiving of a bank’s withdrawal fees on savings accounts is not included in the Joint Statement or the FAQs, but is another example of a responsive service. Allowing a low- or moderate-income individual to make draws from a HELOC during the repayment period could constitute a flexible lending practice. On the other hand, allowing a low- or moderate- income individual to make a withdrawal from an IRA, as allowed under the CARES Act(9) or to draw on a HELOC during the draw period are routine banking services and, as such, are not eligible for CRA consideration.
Examiners will consider any relevant information a bank provides that demonstrates a service is responsive or tailored to the convenience and needs of its assessment area(s), particularly the convenience and needs of low- or moderate-income individuals.
(9) See Coronavirus Aid, Relief, and Economic Security Act (CARES Act), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
Originally published in the “Community Reinvestment Act (CRA) Consideration for Activities in Response to the Coronavirus Pandemic Frequently Asked Questions (FAQs)” on May 27, 2020 and updated on March 8, 2021 by the Board of Govenors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.