Varo Bank, the first true digital only bank that made it through the rigorous chartering process, has issued a comment letter on a potential change to the Community Reinvestment Act (CRA).
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have proposed to amend their regulations implementing the CRA to update how its activities qualify for consideration.
Varo Bank states that it is an “ardent supporter of a strong CRA and we applaud the agencies’ collaboration on this CRA modernization proposal.”
Varo states in the letter:
“Just as the industry has evolved through technology – so to have the industry players. Now more than ever, we have non-banks (e.g. credit unions, mortgage lenders, Fintechs) providing financial services without being subject to the CRA or having any regulatory obligations to serve or invest in LMI communities. We believe the umbrella of CRA should be expanded to include all entities that provide financial services, particularly the provision of credit. This will significantly expand access to affordable credit for LMI populations and increase the community development loans and investments made in those communities.”
Varo adds that overall its mission is to assist the unbanked and LMI (low to moderate income) communities to provide financial inclusion. Varo also shares its opinion on the other changes being proposed.
The comment letter is available here.
