The CRA does not cover all financial areas. CRA primarily covers mortgage, small business, and small farm lending and may cover certain types of consumer loans if they are considered to be a major product offering. Payday lending is not likely a major product offering for a bank and is not specifically considered with regard to CRA.
While there haven’t been changes to CRA relating to payday lending, bank examiners must consider evidence of illegal credit practices, such as discriminatory and predatory lending practices, before assigning an overall CRA rating. As part of any bank examination, we assess how banks are limiting harm to consumers and ensuring they are not discriminating in their lending practices.
These examination results are not made public unless there are significant weaknesses that result in a public enforcement action. However, as a result of that examination work, if there is evidence of illegal credit practices, examiners are required to consider the impact on a bank’s overall CRA rating, and that may result in a downgrade of the CRA rating, which is public.
—Susan Schaaf, senior examiner–risk specialist, and Mike Coleman, banking supervisor–risk specialist, Federal Reserve Bank of Cleveland