CRA (Reg BB) Flashcards
Every bank’s CRA public file must contain all of the following information EXCEPT a:
A. List of branches
B. Map of the assessment area(s)
C. List of the types of services that the institution offers
D. Description of current efforts made to help meet community credit needs
D. Description of current efforts made to help meet community credit needs
The CRA regulation mandates certain information be contained in the bank’s public file, including a list of branches, assessment area map, and list of bank services. The regulation does not require a description of the bank’s efforts to meet the community’s credit needs.
Under CRA rules, banks other than small banks and intermediate small banks must report which of the following types of loans?
A. Small farm loans
B. Automobile loans secured by home equity
C. Unsecured consumer loans
D. Unsecured consumer credit card lines
A. Small farm loans
Non-small banks must collect and submit information on small business loans, small farm loans, and community development loans. Information on home equity loans and unsecured consumer loans or lines of credit may be reported to provide context on the bank’s total lending activities, but the CRA regulation does not require these types of data to be reported.
A bank has been meeting periodically with a local community activist group to get the group’s input on the needs of the community and how the bank can help serve those needs through its lending activities. The bank president read an article about the CRA Sunshine Regulation and asked the compliance officer what the bank’s responsibilities are under this regulation as it relates to these meetings with the community group. Which of the following best represents the bank’s responsibilities under the CRA Sunshine Regulation?
A. The bank must document in writing the minutes of all meetings and place the minutes in its CRA Public File
B. The bank has no responsibilities under the CRA Sunshine Regulation in relation to the meetings
C. The bank must record the names of all individuals that attended the meetings and make those lists public
D. If the meetings last for more than 3 years, the bank must formalize an agreement with the community group in writing and make that agreement public
B. The bank has no responsibilities under the CRA Sunshine Regulation in relation to the meetings
The CRA Sunshine Regulation (Regulation G) contains requirements if the bank enters into a written agreement with a Non-governmental Entity or Person (NGEP) regarding certain CRA responsibilities of the bank. Simply meeting with a local community group imparts no responsibilities under the rule since no written agreement has been entered into yet. There are no requirements to document the events of the meeting or formalize an agreement with the group if meetings last for more than 3 years. And even if agreements for actions are made in the meeting, Regulation G does not mandate those be made public unless a specific written agreement is entered into.
One purpose of the CRA is to:
A. Encourage banks to help meet the credit needs of their local community
B. Require banks to satisfy all of the credit needs of their local community before they make loans elsewhere
C. Require that banks increase their real estate lending
D. Ensure that the majority of a bank’s real estate loans are to individuals living in low- and moderate-income neighborhoods
A. Encourage banks to help meet the credit needs of their local community
The stated purpose of the CRA is to ensure and encourage banks to help meet the needs of the communities in which they operate. They do this by lending in the communities in which they accept deposits, with particular attention given to low- and moderate-income (LMI) areas. The CRA does not require banks to lend in their own communities before elsewhere or to increase their real estate lending. Nor must a majority of a bank’s loan be located in LMI areas.
For a bank located in an MSA, which of the following is MOST relevant when identifying the bank’s CRA assessment area?
A. Competitors’ trade areas
B. Data derived from marketing surveys
C. Data derived from zip code analysis
D. Political or geographic subdivisions
D. Political or geographic subdivisions
The CRA regulation requires banks to determine their own assessment area(s) for CRA purposes. The regulation explicitly requires the bank’s assessment area to be comprised of whole political or geographic subdivisions. The regulation does not require competitors’ trade areas, marketing survey data, or zip code analytics to factor into the assessment area delineation. Some of this may be useful, but it is not required.
During a CRA exam, the examiner has declined to credit a bank’s impactful investment in a small business investment company (SBIC) that operates in a neighboring state outside of the assessment area. What is the BEST response?
A. Agree that declining to include the investment was correct and promise to review CRA investment guidelines with staff
B. Argue that the investment must be considered due to its unusually large magnitude
C. Argue that this SBIC has a long history of and a sterling reputation for community development
D. Discuss with the examiner the work the SBIC does to benefit the area due to its geographic interdependence
D. Discuss with the examiner the work the SBIC does to benefit the area due to its geographic interdependence
Under the CRA, investments made outside the bank’s assessment area are generally not eligible for CRA consideration. However, the investment may be considered if it benefits the bank’s assessment area in some indirect fashion, especially if it benefits LMI areas. Simply because the investment is large does not necessarily provide the CRA benefit. Simply because the SBIC has a long history and reputation for community development, while laudable, does not automatically mean the bank’s investment with it will automatically provide CRA credit. It depends on the benefit to the bank’s assessment area, whether direct or indirect.
A new compliance professional learns that the bank submitted last year’s CRA data and took six months to correct all the mistakes. What is the BEST way to respond to this issue?
A. Develop a plan to start reviewing the current year’s CRA data and monitor the errors and come up with ways to prevent future errors
B. Develop a plan to first submit the current year’s CRA data to get all the errors corrected in less than six months next year
C. Develop a plan to start reviewing the current year’s CRA data after December 31 and monitor the errors and fix all the mistakes before the data is submitted
D. Develop a plan to start reviewing the current year’s CRA data but wait until receiving an error report to fix the errors
A. Develop a plan to start reviewing the current year’s CRA data and monitor the errors and come up with ways to prevent future errors
Taking six months to correct erroneous CRA data is far too long; for the next year’s submission, adequate time must be taken to correct errors before submission. An action plan should be developed to ensure this can happen. This process should be in place to examine the current year’s data, rather than risking a further incorrect submission. Each of the other choices does not provide enough assurance that each year’s data can be submitted accurately and timely.
During an exit meeting with the regulator, the examiner-in-charge releases ratings on the bank’s performance. Which statement applies to the confidentiality of the ratings?
A. The CRA, composite, and component ratings assigned by the regulatory authority are subject to confidentiality
B. The CRA rating is not subject to confidentiality, but the composite and component ratings are confidential
C. The CRA rating is subject to confidentiality, but the composite and component ratings are not confidential
D. Ratings by the examiners are not subject to confidentiality and can be shared with all employees and the public
B. The CRA rating is not subject to confidentiality, but the composite and component ratings are confidential
Under the CRA, a bank’s overall CRA rating is public information, but the composite and component ratings are confidential.
Under the CRA lending test, which type of loan is NOT used as a primary performance criterion?
A. Consumer
B. Small farm
C. Small business
D. Home mortgage
A. Consumer
Lending Test: Mortgage, small business/farm loans, community development
Which concerns the compliance professional the MOST about a bank’s performance when preparing for a CRA examination?
A. Investments generally consist of simple traditional assets
B. Language services include commonly spoken languages
C. Lending includes mortgage loans from a nondepository affiliate
D. Branch expansion includes five new locations, two in low- and moderate-income geographies
A. Investments generally consist of simple traditional assets
When evaluating performance under CRA, the innovativeness and variety of investments is a critical factor that will positively impact the bank’s rating. If investments are only simple traditional assets, they may be criticized. Having language services that include commonly spoken languages is impressive on its own, and no other languages would be necessary. Mortgage lending from non-depository affiliates is not concerning from a CRA perspective. And if the bank opened five new branches, and two of those five are in LMI areas, this is an acceptable ratio from a CRA perspective.
True/False: The CRA compliance officer or compliance committee is responsible for seeing that the CRA policy is carried out on a day-to-day basis.
True
True/False: All large retail banks are required to collect data about each small business or small farm loan they originate or purchase.
True
True/False: A bank’s CRA rating is affected adversely if examiners find evidence of discriminatory or other illegal credit practices.
True
True/False: Only members of the public who are properly authorized by federal regulators may review the public section of a bank’s CRA Performance Evaluation.
False
Which one of the following is NOT one of the seven criteria considered when examiners develop a CRA performance context?
A. CRA public file and written comments
B. Customer surveys
C. Past performance of the institution
D. Lending, investment and bank service opportunities
B. Customer surveys
True/False: A bank’s CRA rating reflects its financial condition.
False
True/False: A bank’s assessment area does NOT include deposit-taking ATMs.
False
All employees of banking institution covered by the CRA should know:
A. The name of the person(s) serving as the compliance officer or committee
B. How to handle customer requests regarding the CRA with respect and courtesy
C. The location of the CRA public file
D. All of the above
D. All of the above
True/False: The CRA recognizes that CRA responsibilities should be addressed in keeping with safe and sound banking practices.
True
True/False: A bank that chooses to develop its own strategic plan for CRA evaluation must include measurable goals, solicit public input, and obtain approval from its primary federal regulator.
True
True/False: The CRA public notice posted at a branch indicates where the complete public file is available for review.
True
Poor performance on CRA examinations can result in:
A. Criminal penalties
B. Revocation of a federal banking charter
C. Denial of applications for mergers, acquisitions or expansions
C. Denial of applications for mergers, acquisitions or expansions
When regulators assess a large retail bank under the investment test, criteria include:
A. The number and dollar amount of qualified investments
B. The innovativeness or complexity of qualified investments
C. The degree to which qualified investments are not provided by private investors
D. All of the above
D. All of the above
True/False: A bank’s CRA performance rating must be made available to regulators but not to the public.
False
When regulators assess a large retail bank under the lending test, they examine the lending record in terms of:
A. The geographic distribution of the loans.
B. Borrower characteristics.
C. The use of innovative or flexible lending practices to address the credit needs of low- and moderate-income individuals
D. All of the above.
D. All of the above.
True/False: Noncompliance with the CRA does NOT jeopardize a depository institution’s efforts to establish or relocate branch facilities.
False
All institutions affected by the CRA must compile and make available a public file that contains:
A. The most recent CRA Performance Evaluation
B. All written comments received from the public in the current year and the past two years relating to CRA efforts
C. Lists of branches and services provided at each location
D. All of the above
D. All of the above
In assigning a CRA rating, examiners consider:
A. The type of community served
B. The expertise of the institution
C. Local economic conditions
D. All of the above
D. All of the above
Redlining is the perceived practice of
A. Refusing to lend money to people in poorer neighborhoods
B. Rejecting credit applications from non-creditworthy customers
C. Refusing to honor credit applications from customers outside a local community
D. None of the above
A. Refusing to lend money to people in poorer neighborhoods
What banks are subject to CRA?
All federally insured commercial banks, savings banks and savings associations that are in the business of providing credit to the public.
Credit unions and some special purpose banks (that don’t perform commercial or retail banking services by granting credit to the public in the ordinary course of business) are exempt from CRA provisions.
Big City Bank loses thousands of dollars each year in bad loans to residents of a government-sponsored housing project. Compliance officer Bill Freeman is aware of these losses but continues to encourage lending in this area as a means of complying with CRA. Bank President Harold James disagrees with Freeman, maintaining the institution should take a more guarded approach to lending — regardless of the area. Who should you agree with?
A. James
B. Freeman
A. James
CRA compliance does not require an institution to make loans that are inconsistent with safe and sound banking practices.
Depository institutions and community groups that make CRA-related agreements must disclose the terms of those agreements if they involve loans of more than $____ or grants of more than $____.
$50,000
$10,000
What institutions does the CRA apply to?
FDIC-insured institutions
Large banks must collect and maintain data on which small business or small farm loans?
A. Originated
B. Purchased
C. Originated or Purchased
D. Neither
C. Originated or Purchased
A small bank means a bank that, as of December 31 of both prior two calendar years, had assets of less than $__________.
$1.564 billion
True/False: An intermediate small bank is a small bank that had at least $391MM in assets for both of the prior two calendar years, but less than $1.564 billion for one of the prior two calendar years.
True
