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Federal Financial Regulators Support Renewable Energy: Proposed CRA Changes


9/12/14

On September 8, 2014, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency requested comment on proposed clarifications and revisions to their Interagency Questions and Answers Regarding Community Reinvestment. These Questions and Answers provide further guidance to agency personnel, financial institutions, and the public on the regulations that implement the Community Reinvestment Act (CRA).

The Agencies first published the Questions and Answers in 1996 and last published them in their entirety in 2010. In 2013, the Agencies proposed certain revisions for which they requested comments. Pursuant to such comments and concerns, the Agencies now released a new set of proposed Questions and Answers to clarify the existing Questions and Answers.

Renewable Energy: Proposed Questions and Answers

A number of commenters suggested that the Agencies should address whether alternative energy facilities and energy efficiency enhancements that are responsive to local needs are eligible for CRA consideration. Additionally, bankers have commented that examiners do not always give consideration for projects or initiatives that incorporate “green” components because the concept is not specifically addressed in either the CRA regulations or the Questions and Answers.

The Agencies have learned of examples in which financial institutions helped finance energy-efficiency initiatives related to the rehabilitation or development of affordable housing projects and were not given CRA consideration for their activities.

The Agencies have also heard from bankers that having specific examples in guidance helps to create incentives within their financial institutions to pursue such projects.

The Agencies concur that loans that enable energy initiatives that help to reduce the cost of operating or maintaining affordable housing, even if the benefit to residents is indirect, qualify for consideration as community development loans.

To address these comments and concerns, the Agencies propose to revise Q&A § __.12(h) – 1 to incorporate a new example of a community development loan that would illustrate how a loan that finances renewable energy or energy-efficient technologies and that also has a community development component may be considered in a financial institution’s performance evaluation.

The text of proposed revised Q&A § __.12(h) – 1 follows:

§ __.12(h) – 1: What are examples of community development loans?
A1. Examples of community development loans include, but are not limited to, loans to
borrowers to finance renewable energy or energy-efficient equipment or projects that support the development, rehabilitation, improvement, or maintenance of affordable housing or community facilities, such as a health clinic, even if the benefit to low- or moderate-income individuals from reduced cost of operations is indirect, such as reduced cost of providing electricity to common areas of an affordable housing development.

Comments

Comments on these proposed Questions and Answers must be received on or before 60 days after publication in the Federal Register.

You may send letters of support to:

Legislative and Regulatory Activities Division
Office of the Comptroller of the Currency
Mail Stop 9W-11, 400 7th Street SW., Washington, DC 20219
Email: regs.comments@occ.treas.gov

Board of Governors of the Federal Reserve System
Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Ave. NW, Washington, DC 20551
Email: regs.comments@federalreserve.gov

Federal Deposit Insurance Corporation
Robert E. Feldman, Executive Secretary, Federal Deposit Insurance Corporation
550 17th Street, NW., Washington, DC 20429
Email: Comments@FDIC.gov

What does CohnReznick Think?
We see this as a very positive step forward for the nation and true leadership on the part of U.S. financial regulators. By establishing a clear appreciation of the many material benefits of renewable energy for communities across the nation, greater investment in renewable energy should result. We encourage expressions of support for such clarifications; clarity which will increase investment in renewable energy, economic growth, new jobs, greater energy independence, and cost savings for Americans. 

For more information, please see the Notice here.

Contact

For more information, please contact Anton Cohen, Partner and Renewable Energy Industry Practice National Director, at 301-280-1822, or Lee Peterson, Senior Manager, at 404-847-7744.

For more information on CohnReznick’s Renewable Energy Industry Practice, please visit our webpage.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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