Prompt:
Answer the question based on the given passages. Only give me the answer and do not output any other words.

The following are given passages.
Passage 1:
La Belle Township, Lewis County, Missouri
La Belle Township is an inactive township in Lewis County, in the U.S. state of Missouri.La Belle Township was established in 1866, and named after the community of La Belle, Missouri.
Passage 2:
The Great Man (2014 film)
The Great Man (Le Grand Homme) is a 2014 French drama film co-written and directed by Sarah Leonor. It was screened in the Discovery section at the 2014 Toronto International Film Festival.

Cast
Jérémie Renier as Hamilton / Michaël Hernandez
Surho Sugaipov as Markov / Mourad Massaev
Ramzan Idiev as Khadji
Daniel Fassi as Gradé Afghanistan
Jean-Yves Ruf as Colonel Lacour
Sabine Massé as Sabina
Miglen Mirtchev as Johnson
Paul Massé as Magomed
Laura Arsangereeva as Madina
Issita Arslanov as Issita
Michaël Klein as Directeur d'école
Daphné Dumons as Camille
Manon Gineste as Maëva
Sava Lolov as Dr. Arnold
Guillaume Verdier as Sergent-chef Gao
Passage 3:
La Belle
La Belle is a French term meaning "the beautiful one" (feminine); it is sometimes used metaphorically to refer to the country of France.
La Belle may be a place in the US:

La Belle, Missouri
La Belle, New Mexico, a ghost town
La Belle, Texas, an unincorporated community
La Belle Township, Lewis County, Missouri, an inactive township
La Belle Township, Marshall County, South DakotaLa Belle may also be:

La belle jardinière, aka Madonna and Child with Saint John the Baptist, a painting
La Belle, a putative 18th century Huguenot outpost at the Falls of the Ohio
La Belle (discotheque), scene of a 1986 bombing in Berlin, Germany
La Belle Dame sans Merci, a ballad
La Belle, a 17th century sailing ship
La Belle Verte, a 1996 film
James D. La Belle, U.S. Marine Hero
La Belle, a 2000 Korean movie starring Oh Ji-ho

See also
Labelle (disambiguation)
Lac La Belle (disambiguation)
Passage 4:
La Belle Américaine
La belle américaine is a French comedy film from 1961, directed by Robert Dhéry, written by Alfred Adam and starring Alfred Adam and Louis de Funès. The film was known under the titles La bella americana (Italian), The American Beauty (English) and Der tolle Amerikaner (German).

Plot
The wife of a rich man learns that her husband has an affair with a younger woman. She takes revenge on him by selling his beloved big car for little money. The worker Marcel Perrignon is very happy about this bargain but when his boss sees the car, he envies him and Perrignon gets fired. This is the start of a number of mishaps for Perrignon.

Cast
Passage 5:
The Great Man (disambiguation)
The Great Man is 1956 American drama film directed by and starring José Ferrer, based on a novel by Al Morgan.
The Great Man may also refer to:

The Great Man (2014 film), a 2014 French drama film
The Great Man (novel), a 2007 Kate Christensen novel
William Pitt, 1st Earl of Chatham (1708–1778), English statesman known as "The Great Man"
The Great Man (play), a 2000 play by David Williamson
Great Man (film), a 1951 French drama film

See also
Great man theory, a 19th-century idea according to which history can be largely explained by the impact of great men
Passage 6:
The Great Man Votes
The Great Man Votes is a 1939 American drama film starring John Barrymore as a widowed professor turned drunkard who has the deciding vote in an election for mayor. It was based on the short story of the same name by Gordon Malherbe Hillman published in the November 1933 issue of American Magazine. The plot of the 2008 movie Swing Vote has been compared to The Great Man Votes.

Plot
Former Harvard professor Gregory Vance (John Barrymore), now an outcast alcoholic in a small city, is introduced hitching a ride with the local milkman, who also delivers alcohol to him, after his shift in his current job as a night watchman.  Despite his alcoholism, Vance cares for his children, Joan (Virginia Weidler) and Donald (Peter Holden), bringing them up on the classics, teaching them Latin, and having them recite Shakespeare. They in turn look after their father and his reputation.
After an altercation between his children and some bullies, led by the son of "Iron Hat" McCarthy (Donald McBride), the local political boss, Vance is visited by his children's teacher, Agnes Billow (Katherine Alexander), and the two become friendly with each other, especially as she realizes that Vance is a  writer she greatly respected and he reveals that his fall from respectability began with the death of the children's mother.
With a city election for mayor nearing, Iron Hat is informed that every vote in the city is already locked in place, with a likely tie between the boss's handpicked current mayor and a rival, with one exception in one crucial ward—Gregory Vance.  At the same time, Vance's wealthy in-laws are threatening to take custody of his children, something Joan and Donald do not want, despite the material advantages that would offer them.
Trying to woo Vance for his vote, Iron Hat offers him a low-level job with the city, but the children are able to raise the bargaining stakes until Vance is offered the post of Commissioner of Education.  Vance himself is reluctant to be a party to such dirty politics, but when he demands getting the job offer in writing, he is able to expose the corruption of the mayor and Iron Hat.  Now socially respectable and a new man, Vance is able to turn over a new leaf, presumably along with Miss Billow.

Cast
Reception
The film recorded a loss of $10,000.
Passage 7:
Labelle (disambiguation)
Labelle, LaBelle or La Belle is a family name of French and French-Canadian origins. It may refer to:

Places
Labelle, Quebec
Labelle, Nova Scotia
Labelle (electoral district), a federal riding in Quebec
Labelle (provincial electoral district), another, provincial riding also in Quebec
Labelle County, Quebec, a former county
Antoine-Labelle Regional County Municipality, Quebec
Papineau-Labelle Wildlife Reserve, Quebec.
LaBelle, Florida
LaBelle, Pennsylvania, Luzerne Township, Fayette County, Pennsylvania
LaBelle, Texas
La Belle Station, Northern Territory, Australia

People
Antoine Labelle
Chuck Labelle
Doug LaBelle II
James W. LaBelle
Jean-Baptiste Labelle
Jean-Baptiste Labelle (politician)
Marc LaBelle
Patti LaBelle

Other
Labelle, a former American R&B and soul group
Labelle (album), the group's 1972 eponymous debut

See also
Labille, a similarly spelled surname
Passage 8:
Robert Dhéry
Robert Dhéry (27 April 1921 – 3 December 2004) (born Robert Léon Henri Fourrey or Robert Foullcy) was a French comedian, actor, director and screenwriter.
He was married to actress Colette Brosset, with whom he appeared onstage in La Plume de Ma Tante.
He appeared on Broadway from 1958 to 1960 in La Plume de Ma Tante, and was, along with the rest of the entire cast (Pamela Austin, Colette Brosset, Roger Caccia, Yvonne Constant, Genevieve Coulombel, Michael Kent, Jean Lefevre, Jacques Legras, Michael Modo, Pierre Olaf, Nicole Parent, Ross Parker, Henri Pennec) awarded a Special Tony Award 1959 for contribution to the theatre.

Selected filmography
Night Shift (1944)
Last Chance Castle (1947)
Branquignol (1949)
I Like Only You (1949)
Bernard and the Lion (1951)
Love Is Not a Sin (1952)
La demoiselle et son revenant (1952)
The Pirates of the Bois de Boulogne (1954)
Passage 9:
The Great Man's Lady
The Great Man's Lady is a 1942 American Western film directed by William A. Wellman and starring Barbara Stanwyck and Joel McCrea. It is based on the short story "The Human Side" by Viña Delmar.It was filmed at two locations in Thousand Oaks, California: Joel McCrea Ranch and nearby Moorpark Road.

Plot
A statue is being dedicated to the late founder of Hoyt City, and reporters from around the country have gathered, speculating that "the old lady's going to talk." When the anticipated "old lady" does not appear at the event, they rush to her home. She is centenarian, Hannah Sempler Hoyt, who lives in an old mansion among the skyscrapers of Hoyt City. As she confronts the press who have barged in, a photographer says, "Hold it, Mrs. Hoyt!" She replies that her name is Hannah Sempler, and refuses to answer their questions as to whether she and Hoyt had been married, which as another reporter says, would make him a bigamist. The intruders leave, having learned nothing to prove or disprove the many rumors, but Hannah is persuaded to tell her story to a young female biographer who lags behind. She reminisces about her experiences with Ethan Hoyt in the American West.
In 1848, a teenaged Hannah Sempler is squired by her wealthy father's associate, Mr. Cadwallader, but she is not interested. Hannah meets and flirts with a young pioneer and dreamer, Ethan Hoyt, who comes to her home seeking financial backing from her father in order to build a city in the western wilderness. Her father rejects Ethan's proposal, stating that it is too risky. Hannah, however, falls in love with the young man, and quite impulsively, they elope and head west. The first years of their marriage are not easy, but the couple are happy. When Ethan loses all his money and possessions in a drunken gambling spree to Steely Edwards, Hannah wins back his losses and befriends Steely, who accompanies the couple to Sacramento, California, where they hope to strike it rich mining.
In Sacramento, Hannah and Ethan spend less time together, with Ethan working long hours in the mines. One day, Hannah discovers silver on Ethan's boots, carried from the Virginia City mine where he had been working. Hannah knows she is pregnant, but does not reveal this to Ethan, knowing he would never leave her behind in that condition. Instead she encourages Ethan to go to Virginia City and find his fortune in the silver mines. Thinking Hannah wants him gone so she can be with Steely, Ethan leaves her with no intention of returning.
After he leaves for Virginia City, the friendship between Hannah and Steely grows. Steely looks after Hannah and her twin babies. When Sacramento is threatened by torrential flooding, Hannah plans to travel to San Francisco. But knowing that Hannah still loves Ethan, Steely arranges for her to travel by coach to Virginia City to be with her husband—he will go to San Francisco alone. As the coach crosses a bridge near Sacramento, the river overflows and washes away the coach and its passengers. Hannah survives, but the babies perish.
After burying the twins, and believing that Hannah is also dead, Steely travels to Virginia City to tell Ethan the tragic news. It has been years since they've seen or spoken, and by now Ethan has become a wealthy man. When Steely tells him that Hannah is dead, Ethan shoots him, saying, "He killed my wife." Thinking that Hannah and Steely are now dead—Steely actually survives the shooting—Ethan continues his dream of building a great city.
Steely returns to Sacramento and discovers that Hannah is still alive. He tells her that Ethan, who believes she is dead, has married another woman. Steely and Hannah move to San Francisco and open a gambling casino. Years later, Hannah's father visits her and urges her to "disappear" so as not to threaten the political future of Ethan Hoyt, who is now representing her father's railroad interests. Hannah refuses her father's request, and travels to Hoyt City, where she watches Ethan giving a political speech. No longer a champion of the people as he once dreamed of becoming, Ethan is now a man of wealth and power, participating in corrupt practices to achieve private goals. Ethan sees Hannah in the crowd and they meet. She tells him that she had divorced him, knowing his political future would be ruined by scandal if it were known they were still married. She reminds him of the dreamer he once was. He goes off with a renewed idealism, devoting the rest of his life to helping the less fortunate, even at his own expense.
The story concludes as it started, with the aged Hannah and the young female biographer discussing Ethan Hoyt, standing beneath the impressive statue. Hannah has been alone for many years now. Steely died in the 1906 San Francisco fire, the same year that Ethan returned to Hoyt City, to die in Hannah's mansion. No one knew why he chose to do this, and for some thirty more years Hannah has remained silent about their marriage. The biographer now realizes the profound role that Hannah played in Ethan's life and success, and in the founding of this now great city. Also aware of Ethan's mythic reputation, she kisses Hannah sweetly, saying, "I'm kissing my biography [of Ethan] goodbye." Before Hanna leaves the statue, the old woman tears up the marriage certificate she has kept all these years, saying of his myth, and perhaps their relationship, "Forever, Ethan. Now no one can change it. Forever."

Cast
Barbara Stanwyck as Hannah Sempler
Joel McCrea as Ethan Hoyt
Brian Donlevy as Steely Edwards
K. T. Stevens as Girl biographer
Thurston Hall as Mr. Sempler
Lloyd Corrigan as Mr. Cadwallader
Etta McDaniel as Delilah
Frank M. Thomas as Mr. Frisbee
William B. Davidson as Senator Knobs
Lillian Yarbo as Mandy
Helen Lynd as Bettina Sempler
David Clyde as Bartender
Passage 10:
William A. Wellman
William Augustus Wellman  (February 29, 1896 – December 9, 1975) was an American film director, producer, screenwriter, actor and military pilot. He was known for his work in crime, adventure, and action genre films, often focusing on aviation themes, a particular passion. He also directed several well-regarded satirical comedies. His 1927 film, Wings, was the first film to win an Academy Award for Best Picture at the 1st Academy Awards ceremony.Beginning his film career as an actor, he went on to direct over 80 films, at times co-credited as producer and consultant, from the silent era through the Golden Age of Hollywood. He was nominated for four Academy Awards: three Best Director Oscars for the original A Star Is Born (1937), Battleground (1949), and The High and the Mighty (1954) and one in Best Original Story for A Star is Born, which he won. In 1973, he received the Directors Guild of America's Lifetime Achievement Award. He was previously a decorated combat pilot during World War I, serving in the Lafayette Flying Corps of the French Air Force, and earning a Croix de Guerre with two palms for valorous action.

Early life
Wellman was born in Brookline, Massachusetts. His father, Arthur Gouverneur Wellman, was a Boston Brahmin. William was a five times great-grandson of Puritan Thomas Wellman, who emigrated to the Massachusetts Bay Colony circa 1640.  He was also a great-great-great-grandson of Welsh-born Francis Lewis of New York, one of the signatories to the Declaration of Independence. Wellman's mother, Cecilia McCarthy, was an Irish immigrant.
During his teenage years, Wellman often found himself in trouble with authorities. He was expelled from Newton High School in Newtonville, Massachusetts for dropping a stink bomb on the principal's head. He was also arrested and placed on probation for car theft. His mother, who actually worked as a probation officer, was asked to address Congress on the subject of juvenile delinquency. Later, young William worked as a salesman, as a general laborer in a lumber yard, and as a player on a minor-league hockey team.

World War I
In World War I, Wellman enlisted in the Norton-Harjes Ambulance Corps to serve as a driver in Europe. While in Paris, Wellman joined the French Foreign Legion and was assigned on December 3, 1917 as a fighter pilot, becoming the first American to join Escadrille N.87 in the Lafayette Flying Corps (not the sub-unit Lafayette Escadrille as usually stated), where he earned himself the nickname "Wild Bill", and was awarded the Croix de Guerre with two palms. N.87, les Chats Noir (Black Cat Group) was stationed at Lunéville in the Alsace-Lorraine sector and was equipped with Nieuport 17 and later Nieuport 24 "pursuit" aircraft. Wellman's combat experience culminated in three recorded "kills", along with five probables, although he was ultimately shot down by German anti-aircraft fire on March 21, 1918. Wellman survived the crash but he walked with a pronounced limp for the rest of his life.Wellman's air-combat credits include the following in 1918:
January 19: a German "Rumpler" shot down in front of American lines in Lorraine by Wellman and Thomas Hitchcock.
January 20: a German "Rumpler" shot down near German airfield at Mamy, France; pilot killed/gunner escaped
March 8: forced two observers to jump from an observation balloon (attack unsuccessful; balloon taken down)
March 9: fired on a German "Rumpler" over Parroy; plane escaped, but rear gunner killed.
March 9: shot down a German "Rumpler"; killed rear gunner; pilot killed by airman Ruamps.
March 9: shot down a German "Albatros"; pilot killed; plane fell into American lines
March 17: shot down at least two +one[?] German patrol planes; not confirmed as fight took place over German lines.
March 18: shot down a German "Rumpler;" not confirmed as fight took place over German lines.Maréchal des logis (Sergeant) Wellman received a medical discharge from the Foreign Legion and returned to the United States a few weeks later. He spoke at War Savings Stamp rallies in his French uniform. In September 1918 his book about French flight school and his eventful four months at the front, Go Get 'Em! (written by Wellman with the help of Eliot Harlow Robinson), was published. He joined the United States Army Air Service, but was too late to fly for America in the war. Stationed at Rockwell Field in San Diego, he taught combat tactics to new pilots.

Film career
While in San Diego, Wellman flew to Hollywood for the weekends in his Spad fighter, using Douglas Fairbanks' polo field in Bel Air as a landing strip. Fairbanks was fascinated with the true-life adventures of "Wild Bill" and promised to recommend him for a job in the movie business; he was responsible for Wellman being cast in the juvenile lead of The Knickerbocker Buckaroo (1919). Wellman was hired for the role of a young officer in Evangeline (1919), but he was fired for slapping Miriam Cooper, the film's star and also the wife of the production’s director, Raoul Walsh.

Wellman hated being an actor, thinking it an "unmanly" profession, and was miserable watching himself on screen while learning the craft. He soon switched to working behind the camera, aiming to be a director, and progressed up the line as "a messenger boy, as an assistant cutter, an assistant property man, a property man, an assistant director, second unit director and eventually...director." His first assignment as an assistant director for Bernie Durning provided him with a work ethic that he adopted for future film work. One strict rule that Durning enforced was no fraternization with screen femme fatales, which almost immediately Wellman broke, leading to a confrontation and a thrashing from the director. Despite his transgression, both men became lifelong friends, and Wellman steadily progressed to more difficult first unit assignments.Wellman made his uncredited directorial debut in 1920 at Fox with The Twins of Suffering Creek. The first films he was credited with directing were The Man Who Won and Second Hand Love, released on the same day in 1923. After directing a dozen low-budget 'horse opera' films, Wellman was hired by Paramount in 1927 to direct Wings, a major war drama dealing with fighter pilots during World War I that was highlighted by air combat and flight sequences. The film culminates with the epic Battle of Saint-Mihiel. In the 1st Academy Awards it was one of two films to win Best Picture (the other was Sunrise), although, due to tensions within the studio regarding time and budget overages, Wellman wasn't invited to the event.Wellman's other films include The Public Enemy (1931), the first version of A Star Is Born (1937), Nothing Sacred (1937), Beau Geste (1939) starring Gary Cooper, Thunder Birds (1942), The Ox-Bow Incident (1943), Lady of Burlesque (1943), The Story of G.I. Joe (1945), The Iron Curtain (1948), Battleground (1949) and two films starring and co-produced by John Wayne, Island in the Sky (1953) and The High and the Mighty (1954).While he was primarily a director, Wellman also produced 10 films, one of them uncredited, all of which he also directed. His last film was Lafayette Escadrille (1958), which he produced, directed, wrote the story for and narrated. He wrote the screenplay for two other films that he directed, and one film that he did not direct: 1936's The Last Gangster. Wellman wrote the story for A Star Is Born and (with Robert Carson) received the Academy Award for Best Story. Wellman is credited for the story in the remakes released in 1954, 1976, and 2018. Wellman's work was influenced by his good friend and fellow film director Howard Hawks, with whom he rode motorcycles together in a group called the Moraga Spit and Polish Club. Wellman reportedly worked fast, usually satisfied with a shot after one or two takes. Despite his reputation for not coddling his leading men and women, he coaxed Oscar-nominated performances from seven actors: Fredric March and Janet Gaynor (A Star Is Born), Brian Donlevy (Beau Geste), Robert Mitchum (The Story of G.I. Joe), James Whitmore (Battleground), and Jan Sterling and Claire Trevor (The High and Mighty). Regarding actors, Wellman in a 1952 interview stated, "Movie stardom isn't about acting ability, it's personality and temperament". He then added, "I once directed Clara Bow. She was mad and crazy but what a personality!"

Innovations
Wings led to several firsts in filmmaking including newly invented camera mounts that could be secured to plane fuselages and motor-driven cameras to shoot actors while flying as the cameramen ducked out of frame in their cockpits. Star Richard Arlen had some flying experience but co-star Buddy Rogers had to learn to fly for the film, as stunt pilots could not be used during close-up shots. Towers up to 100 feet were used to shoot low-flying planes and battle action on the ground.During the filming of Beggars of Life, a silent film starring Wallace Beery, Richard Arlen and Louise Brooks, sound was added to Beery's introductory scene at the behest of Paramount Studio. Wellman reportedly hung a microphone from a broom so Beery could walk and talk within the scene, avoiding the static shot required for early sound shoots. During the filming of Chinatown Nights (1929), he sat under the camera on a dolly with the mic between his legs, essentially inventing a shotgun mic.

Awards
Wellman won a single Academy Award, for the story of A Star Is Born. He was nominated as best director three times: for A Star Is Born, Battleground and The High and Mighty, for which he was also nominated by the Directors Guild of America as best director. In 1973, the DGA honored him with a Lifetime Achievement Award. Copies of both Wings and The Story of G.I. Joe are preserved in the Academy Film Archive. Wellman also has a star on the Hollywood Walk of Fame.

Personal life and death
Wellman revealed near the end of his life that he had married a French woman named Renee during his time in The Lafayette Flying Corps. She was killed in a bombing raid during the war. Later, between 1918 and 1934, he married four additional times in the United States:

Helene Chadwick: married (1918-1923) separated after a month; later divorced
Margery Chapin (daughter of Frederic Chapin): married (1925-1926); together for a short time; adopted Robert Emmett Tansey's daughter, Gloria.
Marjorie Crawford: married (1930-1933) divorced
Dorothy "Dottie" Coonan: married (March 20, 1934 – 1975); until his death; they had seven children - four daughters, three sons.Dorothy starred in Wellman's 1933 film Wild Boys of The Road and had seven children with him, including actors Michael Wellman, William Wellman Jr., Maggie Wellman, and Cissy Wellman. His daughter Kathleen "Kitty" Wellman married actor James Franciscus, although they later divorced. His first daughter is Patty Wellman, and he had a third son, Tim Wellman.
William Wellman died of leukemia in 1975 at his Brentwood home in Los Angeles. He was cremated, and his ashes were scattered at sea. His widow Dorothy, at age 95, died on September 16, 2009 in Brentwood, California.

Career assessments
Decades after Wellman's death, William Jr. wrote two biographies about his father, The Man and His Wings: William A. Wellman and the Making of the First Best Picture (2006) and Wild Bill Wellman—Hollywood Rebel (2015). Fellow filmmakers have also examined Wellman's career. Richard Schickel in 1973 devoted an episode of his PBS series The Men Who Made the Movies to Wellman, and in 1996, Todd Robinson made the feature-length documentary Wild Bill: Hollywood Maverick.

Selected filmography
See also
List of ambulance drivers during World War I

Answer the question based on the given passages. Only give me the answer and do not output any other words.

Question: Which film has the director who died later, The Great Man'S Lady or La Belle Américaine?
Answer:


The Community Reinvestment Act (CRA; P.L. 95-128, 12 U.S.C. §§2901-2908) addresses how banking institutions meet the credit needs of the areas they serve, particularly in low- and moderate-income (LMI) neighborhoods. The federal banking regulatory agencies—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)—currently implement the CRA. The regulators issue CRA credits, or points, where banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities—that occur with a designated assessment area. These credits are then used to issue each bank a performance rating. The CRA requires these ratings be taken into account when banks apply for charters, branches, mergers, and acquisitions among other things. The CRA, which was enacted in 1977, was subsequently revised in 1989 to require public disclosure of bank CRA ratings to establish a four-tiered system of descriptive performance levels (i.e., Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance). In 1995, the CRA examination was customized to account for differences in bank sizes and business models. In 2005, the bank size definitions were revised and indexed to the Consumer Price Index. The 2005 amendments also expanded opportunities for banks to earn CRA credit for public welfare investments (such as providing housing, services, or jobs that primarily benefit LMI individuals). Qualifying activities under the CRA have evolved to include consumer and business lending, community investments, and low-cost services that would benefit LMI areas and entities. Congressional interest in the CRA stems from various perceptions of its effectiveness. Some have argued that, by encouraging lending in LMI neighborhoods, the CRA may also encourage the issuance of higher-risk loans to borrowers likely to have repayment problems (under the presumption that low-income is correlated with lower creditworthiness), which can translate into losses for lenders. Others are concerned that the CRA is not generating sufficient incentives to increase credit availability to qualified LMI borrowers, which may impede economic recovery for some, particularly following the 2007-2009 recession. This report informs the congressional debate concerning the CRA's effectiveness in incentivizing bank lending and investment activity to LMI borrowers. After a discussion of the CRA's origins, it presents the CRA's examination process and bank activities that are eligible for consideration of CRA credits. Next, it discusses the difficulty of determining the CRA's influence on bank behavior. For example, the CRA does not specify the quality and quantity of CRA-qualifying activities, meaning that compliance with the CRA does not require adherence to lending quotas or benchmarks. In the absence of benchmarks, determining the extent to which CRA incentives have influenced LMI credit availability relative to other factors is not straightforward. Banks also face a variety of financial incentives—for example, capital requirements, the prevailing interest rate environment, changes in tax laws, and technological innovations—that influence how much (or how little) they lend to LMI borrowers. Because multiple financial profit incentives and CRA incentives tend to exist simultaneously, it is difficult to determine the extent to which CRA incentives have influenced LMI credit availability relative to other factors.

Prompt:
You are given a report by a government agency. Write a one-page summary of the report.

Report:
Congress passed the Community Reinvestment Act of 1977 (CRA; P.L. 95-128 , 12 U.S.C. §§2901-2908) in response to concerns that federally insured banking institutions were not making sufficient credit available in the local areas in which they were chartered and acquiring deposits. According to some in Con gress, the granting of a public bank charter should translate into a continuing obligation for that bank to serve the credit needs of the public where it was chartered. Consequently, the CRA was enacted to "re-affirm the obligation of federally chartered or insured financial institutions to serve the convenience and needs of their service areas" and "to help meet the credit needs of the localities in which they are chartered, consistent with the prudent operation of the institution." The CRA requires federal banking regulators to conduct examinations to assess whether a bank is meeting local credit needs. The regulators issue CRA credits, or points, where banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit low- and moderate-income (LMI) areas and entities—that occur within assessment areas (where institutions have local deposit-taking operations). These credits are then used to issue each bank a performance rating from a four-tiered system of descriptive performance levels (Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance). The CRA requires federal banking regulators to take those ratings into account when institutions apply for charters, branches, mergers, and acquisitions, or seek to take other actions that require regulatory approval. Congress became concerned with the geographical mismatch of deposit-taking and lending activities for a variety of reasons. Deposits serve as a primary source of borrowed funds that banks may use to facilitate their lending. Hence, there was concern that banks were using deposits collected from local neighborhoods to fund out-of-state as well as various international lending activities at the expense of addressing the local area's housing, agricultural, and small business credit needs. Another motivation for congressional action was to discourage redlining practices. One type of redlining can be defined as the refusal of a bank to make credit available to all of the neighborhoods in its immediate locality, including LMI neighborhoods where the bank may have collected deposits. A second type of redlining is the practice of denying a creditworthy applicant a loan for housing located in a certain neighborhood even though the applicant may qualify for a similar loan in another neighborhood. This type of redlining pertains to circumstances in which a bank refuses to serve all of the residents in an area, perhaps due to discrimination. The CRA applies to banking institutions with deposits insured by the Federal Deposit Insurance Corporation (FDIC), such as national banks, savings associations, and state-chartered commercial and savings banks. The CRA does not apply to credit unions, insurance companies, securities companies, and other nonbank institutions because of the differences in their financial business models. The Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the FDIC administer the CRA, which is implemented via Regulation BB. The CRA requires federal banking regulatory agencies to evaluate the extent to which regulated institutions are effectively meeting the credit needs within their designated assessment areas, including LMI neighborhoods, in a manner consistent with the federal prudential regulations for safety and soundness . The CRA's impact on lending activity has been publicly debated. Some observers are concerned that the CRA may induce banks to forgo more profitable lending opportunities in nontargeted neighborhoods by encouraging a disproportionate amount of lending in LMI communities. Furthermore, some argue that the CRA compels banks to make loans to higher-risk borrowers that are more likely to have repayment problems, which may subsequently compromise the financial stability of the banking system. For example, some researchers have attributed the increase in risky lending prior to the 2007-2009 recession to banks attempting to comply with CRA objectives. Others are concerned that enforcement of CRA objectives has not been stringent enough to compel banks to increase financial services in LMI areas. Almost all banks receive Satisfactory or better performance ratings (discussed in more detail below) on their CRA examinations, which some may consider indicative of weak enforcement. This report informs the congressional debate concerning the CRA's effectiveness in incentivizing bank lending and investment activity to LMI customers. It begins with a description of bank CRA examinations, including how a bank delineates its assessment area; the activities that may qualify for points under the three tests (i.e., lending, investment, and service) that collectively make up the CRA examination; and how the composite CRA rating is calculated. Next, the report analyzes the difficulty in attributing bank lending decisions to CRA incentives. For example, the CRA does not specify the quality and quantity of CRA-qualifying activities, meaning that CRA compliance does not require adherence to lending quotas or benchmarks. Without explicit benchmarks, linking the composition of banks' loan portfolios to either too strong or too weak CRA enforcement is difficult. Banks are also unlikely to get CRA credit for all of the loans they make to LMI customers. Specifically, higher-risk loans that banking regulators explicitly discourage are unlikely to be eligible for CRA consideration. Furthermore, greater mobility of lending and deposit-taking activity across regional boundaries due to various financial market innovations has complicated the ability to geographically link various financial activities. Hence, many banks' financial activities occurring in a designated assessment area that are eligible for CRA consideration may simply be profitable, meaning they may have occurred without the CRA incentive. Finally, this report summarizes recent policy discussions regarding modernization of the CRA. As noted above, the federal banking regulators conduct regular examinations of banks to assess whether they meet local credit needs in designated assessment areas. The regulators issue CRA credits, or points, when banks engage in qualifying activities—such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities—that occur within assessment areas. Regulation BB provides the criteria that a bank's board of directors must use to determine the assessment area(s) in which its primary regulator will conduct its CRA examination. The assessment area typically has a geographical definition—the location of a bank's main office, branches, and deposit-taking automatic teller machines, as well as surrounding areas where the bank originates and purchases a substantial portion of loans. Assessment areas must generally include at least one metropolitan statistical area (MSA) or at least one contiguous political subdivision, such as a county, city, or town. Regulation BB also requires that assessment areas may not reflect illegal discrimination, arbitrarily exclude LMI geographies, and extend substantially beyond an MSA boundary or a state boundary (unless the assessment area is located in a multistate MSA). Banking regulators regularly review a bank's assessment area delineations for compliance with Regulation BB requirements as part of the CRA examination. Instead of a more conventionally delineated assessment area, certain banking firms may obtain permission to devise a strategic plan for compliance with Regulation BB requirements. For example, wholesale and limited purpose banks are specialized banks with nontraditional business models. Wholesale banks provide services to larger clients, such as large corporations and other financial institutions; they generally do not provide financial services to retail clients, such as individuals and small businesses. Limited purpose banks offer a narrow product line (e.g., concentration in credit card lending) rather than provide a wider range of financial products and services. These banking firms typically apply to their primary regulators to request designation as a wholesale or limited purpose bank and, for CRA examination purposes, are evaluated under strategic plan options that have been tailored for their distinctive capacities, business strategies, and expertise. The option to develop a strategic plan of pre-defined CRA performance goals is available to any bank subject to the CRA. The public is allowed time (e.g., 30 days) to provide input on the draft of a bank's strategic plan, after which the bank submits the plan to its primary regulator for approval (within 60 days after the application is received). Regulation BB does not impose lending quotas or benchmarks. Instead, Regulation BB provides banks with a wide variety of options to serve the needs of their assessment areas. Qualifying CRA activities include mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities. For example, banks may receive CRA credits for such activities as investing in special purpose community development entities (CDEs), which facilitate capital investments in LMI communities (discussed below); providing support (e.g., consulting, detailing an employee, processing transactions for free or at a discounted rate, and providing office facilities) to minority- and women-owned financial institutions and low-income credit unions (MWLIs), thereby enhancing their ability to serve LMI customers; serving as a joint lender for a loan originated by MWLIs; facilitating financial literacy education to LMI communities, including any support of efforts of MWLIs and CDEs to provide financial literacy education; opening or maintaining bank branches and other transactions facilities in LMI communities and designated disaster areas; providing low-cost education loans to low-income borrowers; and offering international remittance services in LMI communities. The examples listed above are not comprehensive, but they illustrate several activities banks may engage in to obtain consideration for CRA credits. The banking regulators will consider awarding CRA credits or points to a bank if its qualifying activities occur within an assigned assessment area. The points are then used to compute a bank's overall composite CRA rating. Regulators apply up to three tests, which are known as the lending , investment , and service tests, respectively, to determine whether a bank is meeting local credit need in designated assessment areas. The lending test evaluates the number, amount, and distribution across income and geographic classifications of a bank's mortgage, small business, small farm, and consumer loans. The investment test grades a bank's community development investments in the assessment area. The service test examines a bank's retail service delivery, such as the availability of branches and low-cost checking in the assessment area. The point system for bank performance under the lending, investment, and service tests is illustrated in Table 1 . The lending test is generally regarded as the most important of the three tests, awarding banks the most points (CRA credits) in all rating categories. As shown in Table 1 , banks receive fewer credits for making CRA-qualified investments than for providing direct loans to individuals under the lending test. In some instances, an activity may qualify for more than one of the performance tests. Federal banking regulators evaluate financial institutions based upon their capacity, constraints, and business strategies; demographic and economic data; lending, investment, and service opportunities; and benchmark against competitors and peers. Because these factors vary across banks, the CRA examination was customized in 1995 to account for differences in bank sizes and business models. In 2005, the bank size definitions were revised to include small , intermediate small , and large banks. The bank regulators also indexed the asset size thresholds—which are adjusted annually—to inflation using the Consumer Price Index. As of January 1, 2019, a small bank is defined as having less than $1.284 billion in assets as of December 31 of either of the prior two calendar years; an intermediate small bank has at least $321 million as of December 31 of both of the prior two calendar years but less than $1.284 billion as of December 31 of either of the prior two calendar years; and a large bank has $1.284 billion or more in assets. Small banks are typically evaluated under the lending test. Regulators review (1) loan-to-deposit ratios; (2) percentage of loans in an assessment area; (3) lending to borrowers of different incomes and in different amounts; (4) geographical distribution of loans; and (5) actions on complaints about performance. Intermediate small banks are subject to both the lending and investment tests. Large banks are subject to all three tests. As mentioned previously, direct lending to borrowers, taking place in what is referred to as primary lending markets , qualify for CRA credit under the lending test. Investments taking place in secondary lending markets , in which investors purchase loans that have already been originated (such that little or no direct interaction occurs between investors and borrowers), qualify for CRA credit under the investment test. Secondary market investors may assume the default risk associated with a loan if the entire loan is purchased. Alternatively, if a set of loans are pooled together, then numerous secondary investors may purchase financial securities in which the returns are generated by the principal and interest repayments from the underlying loan pool, thereby sharing the lending risk. Direct ownership of loans or purchases of smaller portions (debt securities) of a pool of loans, therefore, are simply alternative methods to facilitate lending. As shown in Table 1 above, a bank may receive CRA consideration under the lending test for making a loan to LMI individuals that is guaranteed by a federal agency, such as the Federal Home Administration (FHA). If, however, a bank purchases securities backed by pools of FHA-guaranteed mortgage originations, this activity receives credit under the investment test. Thus, the bank receives less CRA credit when the financial risk is shared with other lenders than it would for making a direct loan (and holding all of the lending risk) even though it would still facilitate lending to LMI borrowers. In 2005, the activities that qualify for CRA credit were expanded to encourage banks to make public welfare investments. More specifically, qualifying activities include a public welfare investment (PWI) that promotes the public welfare by providing housing, services, or jobs that primarily benefit LMI individuals; and a community development investment (CDI), economic development investment , or project that meets the PWI requirements. Examples of CDI activities include promoting affordable housing, financing small businesses and farms, and conducting activities that revitalize LMI areas. Banks may engage in certain activities that typically would not be permitted under other banking laws as long as these activities promote the public welfare and do not expose institutions to unlimited liability. For example, banks generally are not allowed to make direct purchases of the preferred or common equity shares of other banking firms; however, banks may purchase equity shares of institutions with a primary mission of community development (discussed in more detail in the Appendix ) up to an allowable CDI limit. The Financial Services Regulatory Relief Act of 2006 ( P.L. 109-351 ) increased the amount that national banking associations and state banks (that are members of the Federal Reserve System) may invest in a single institution from 10% to 15% of a bank's unimpaired capital and unimpaired surplus. CDIs that benefit a bank's designated assessment area may qualify for CRA credit. For CRA purposes, the definition of a CDI was expanded in 2005 to include "underserved and distressed" rural areas and "designated disaster areas" to aid the regional rebuilding from severe hurricanes, flooding, earthquakes, tornados, and other disasters. The disaster area provision allows banks anywhere in America to receive consideration for CRA credit if they facilitate making credit available to a distressed location or geographic area outside of their own assessment areas. Thus, the 2005 revisions to the PWI and CDI definitions made more banking activities eligible for CRA credits. The banking regulators would consider awarding full CRA credits under the lending test to banks that make CDI loans directly in their assessment areas. Under the investment test, however, the banking regulators may choose to prorate the credits awarded to indirect investments. The Appendix provides examples of CDI activities that would qualify for CRA consideration under the investment test. Any awarded CRA credits could be prorated given that investing banks typically would have less control over when and where the funds are loaned. The CRA was revised in 1989 to require descriptive CRA composite performance ratings that must be disclosed to the public. The composite ratings illustrated in Table 2 are tabulated using the points assigned from the individual tests (shown in Table 1 above). Grades of Outstanding and Satisfactory are acceptable; Satisfactory ratings in both community development and retail lending are necessary for a composite Satisfactory . Large banks must receive a sufficient amount of points from the investment and service tests to receive a composite Outstanding rating. Regulators include CRA ratings as a factor when lenders request permission to engage in certain activities, such as moving offices or buying another institution. Denying requests, particularly applications for mergers and acquisitions, is a mechanism that may be applied against banking organizations with ratings below Satisfactory . In 2005, the banking regulators also ruled that any evidence of discrimination or credit practices that violate an applicable law, rule, or regulation by any affiliate would adversely affect an agency's evaluation of a bank's CRA performance. Applicants with poor ratings may resubmit their applications after making the necessary improvements. Covered institutions must post a CRA notice in their main offices and make publicly available a record of their composite CRA performance. Given that the CRA is not a federal assistance program and that several regulators implement it separately, no single federal agency is responsible for evaluating its overall effectiveness. In 2000, Congress directed the Federal Reserve to study the CRA's effectiveness. The Federal Reserve's study reported that lending to LMI families had increased since the CRA's enactment but found it was not possible to directly attribute all of that increase to the CRA. For example, advancements in underwriting over the past several decades have enabled lenders to better predict and price borrower default risk, thus making credit available to borrowers that might have been rejected prior to such technological advances. This section examines the difficulty linking bank lending outcomes directly to the CRA, considering questions raised about the subjectivity of the CRA examination itself, whether prudential regulators use CRA to encourage banks to engage in high-risk lending, and whether the increased lending to LMI borrowers since CRA's enactment can be attributed to other profit-incentives that exist apart from the CRA. Questions have been raised as to whether the CRA examination itself is effective at measuring a bank's ability to meet local credit needs. For example, the CRA examinations have an element of subjectivity in terms of measuring both the quality and quantity of CRA compliance. In terms of quality, regulators determine the "innovativeness or flexibility" of qualified loan products; the "innovativeness or complexity" of qualified investments; or the "innovativeness" of ways banks service groups of customers previously not served. The number of points some CRA-qualifying investments receive relative to others is up to the regulator's judgment given that no formal definition of innovativeness has been established (although regulators provide a variety of examples as guidelines for banks to follow). In terms of quantity, there is no official quota indicating when banks have done enough CRA-qualified activities to receive a particular rating. Without specific definitions of the criteria or quotas, the CRA examination may be considered subjective. Almost all banks pass their CRA examinations. Figure 1 shows the average annual composite scores of banks that received CRA examinations as well as the annual number of bank examinations by size. In general, most banks receive a composite Satisfactory or better rating regardless of the number of banks examined in a year. For all years, approximately 97% or more of banks examined received ratings of Satisfactory or Outstanding . Whether the consistently high ratings reflect the CRA's influence on bank behavior or whether the CRA examination procedures need improvement is difficult to discern. Another issue raised is whether the CRA has resulted in banks making more high-risk loans given that it encourages banks to lend to LMI individuals (perhaps under the presumption that LMI individuals are less creditworthy relative to higher-income individuals). Since passage of the CRA, however, innovations have allowed lenders to better evaluate the creditworthiness of borrowers (e.g., credit scoring, the adoption of automated underwriting), thus enhancing credit availability to both high credit quality and credit-impaired individuals. Credit-impaired borrowers can be charged higher interest rates and fees than those with better credit histories to compensate lenders for taking on greater amounts of credit or default risk. Nontraditional loan products (e.g., interest-only, initially low interest rate) allow borrowers to obtain lower regular payments during the early stages of the loan, perhaps under the expectation that their financial circumstances may improve in the later stages as the loan payments adjust to reflect the true costs. The ability to charge higher prices or offer such nontraditional loan products may result in greater higher-risk lending. Because these technological developments in the financial industry occurred after enactment of the CRA, banks' willingness to enter into higher-risk lending markets arguably cannot be attributed solely to the CRA. Regulators arguably are more reluctant to award banks CRA credit for originating higher-risk loans given the scrutiny necessary to determine whether higher loan prices reflect elevated default risk levels or discriminatory or predatory lending practices. Primary bank regulators are concerned with both prudential regulation and consumer protection. It is difficult for regulators to monitor how well borrowers understood the disclosures regarding loan costs and features, or whether any discriminatory or predatory behavior occurred at the time of loan origination. Regulators use fair lending examinations to determine whether loan pricing practices have been applied fairly and consistently across applicants or if some steering to higher-priced loan products occurred. Nevertheless, although it is not impossible for banks to receive CRA credits for making some higher-priced loans, regulators are mindful of practices such as improper consumer disclosure, steering, or discrimination that inflate loan prices. Prudential regulators are also unlikely to encourage lending practices that might result in large concentrations of high-risk loans on bank balance sheets. Hence, certain lending activities—subprime mortgages and payday lending—have been explicitly discouraged by bank regulators, as discussed in more detail below. Although no consensus definition has emerged for subprime lending, this practice may generally be described as lending to borrowers with weak credit at higher costs relative to borrowers of higher credit quality. In September 2006, the banking regulatory agencies issued guidance on subprime lending that was restrictive in tone. The guidance warned banks of the risk posed by nontraditional mortgage loans, including interest-only and payment-option adjustable-rate mortgages. The agencies expressed concern about these loans because of the lack of principal amortization and the potential for negative amortization. Consequently, a study of 2006 Home Mortgage Disclosure Act data reported that banks subject to the CRA and their affiliates originated or purchased only 6% of the reported high-cost loans made to lower-income borrowers within their CRA assessment areas. Banks, therefore, received little or no CRA credit for subprime mortgage lending. Instead, federal regulators offered CRA consideration to banks that helped mitigate the effects of distressed subprime mortgages. On April 17, 2007, federal regulators provided examples of various arrangements that financial firms could provide to LMI borrowers to help them transition into affordable mortgages and avoid foreclosure. The various workout arrangements were eligible for favorable CRA consideration. Banks are unlikely to receive CRA consideration for originating subprime mortgages going forward. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203 ) requires lenders to consider consumers' ability to repay before extending them mortgage credit, and one way for lenders to comply is to originate qualified mortgages (QMs) that satisfy various underwriting and product-feature requirements. For example, QMs may not have any negative amortization features, interest-only payments, or points and fees that exceed specified caps of the total loan amount; in most cases, borrowers' debt-to-income ratios shall not exceed 43%. QM originations will give lenders legal protections if the required income verification and other proper underwriting procedures were followed. Given the legal protections afforded to QMs, some banks might show greater reluctance toward making non-QM loans. With this in mind, the federal banking regulators announced that banks choosing to make only or predominately QM loans should not expect to see an adverse effect on their CRA evaluations; however, the regulators did not indicate that CRA consideration would be given for non-QMs. Arguably, the federal banking regulators appear less inclined to use the CRA to encourage lending that could be subject to greater legal risks. Banks have demonstrated interest in providing financial services such as small dollar cash advances, which are similar to payday loans, in the form of subprime credit cards, overdraft protection services, and direct deposit advances. However, banks are discouraged from engaging in payday and similar forms of lending. Legislation, such as the Credit Card Accountability Responsibility and Disclosure Act of 2009 ( P.L. 111-24 ), placed restrictions on subprime credit card lending. In addition, federal banking regulators expressed concern when banks began offering deposit advance products due to the similarities to payday loans. Specifically, on April 25, 2013, the OCC, FDIC, and Federal Reserve expressed concerns that the high costs and repeated extensions of credit could add to borrower default risks and issued final supervisory guidance regarding the delivery of these products. Many banks subsequently discontinued offering deposit advances. In general, these legislative and regulatory efforts explicitly discourage banks from offering high-cost consumer financial products and thus such products are unlikely to receive CRA consideration. When various financial products are deemed unsound by bank regulators and not offered by banks, a possible consequence may be that some customers migrate to nonbank institutions willing to provide these higher-cost products. Accordingly, the effectiveness of the CRA diminishes if more individuals choose to seek financial products from nonbank institutions. In general, it can be difficult to determine the extent to which banks' financial decisions are motivated by CRA incentives, profit incentives, or both. Compliance with CRA does not require banks to make unprofitable, high-risk loans that would threaten the financial health of the bank. Instead, CRA loans have profit potential; and bank regulators require all loans, including CRA loans, to be prudently underwritten. As evidenced below, it may be difficult to determine whether banks have made particular financial decisions in response to profit or CRA incentives in cases where those incentives exist simultaneously. For example, banks increased their holdings of municipal bonds in 2009. Although banks may receive CRA consideration under the investment test for purchasing state and local municipal bonds that fund public and community development projects in their designated assessment areas, banks may choose this investment for reasons unrelated to CRA. During recessions, for example, banks may reduce direct (or primary market) lending activities and increase their holdings of securities in the wake of declining demand for and supply of direct loan originations that occur during economic slowdowns and early recovery periods. In addition, a provision of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided banks with a favorable tax incentive to invest in municipal bonds in the wake of the 2007-2009 recession. Hence, determining whether banks increased their municipal holdings because of a turn to securities markets for higher yields following a recession, a favorable tax incentive, or the CRA incentive is challenging. Similarly, banks increased their investments in Small Business Investment Corporations (SBICs, defined in the Appendix ) in 2010. Investments in SBICs allow banks to provide subordinate financing (rather than senior debt) to businesses. Senior lenders have first claims to the business's assets in case of failure; however, subordinate financiers provide funds in the form of mezzanine capital or equity, requiring a higher return because they are repaid after senior lenders. Banks generally are not allowed to act as subordinate financiers because they are not allowed to acquire ownership interests in private equity funds, unless such investments promote public welfare. Hence, attributing community development financing activities, such as SBIC investments, to CRA incentives may arguably be easier (relative to other financing activities) because the ability to engage in subordinate financing activities typically represents a CRA exemption from ordinary permissible banking activities. Following the 2007-2009 recession, however, U.S. interest rates dropped to historically low levels for an abnormally long period of time. Because low-yielding interest rate environments squeeze profits, banks were likely to search for higher-yielding and larger-sized lending opportunities, such as investments in SBICs. Hence, it remains difficult to determine whether a particular bank's decision to increase SBIC financing activities was driven by normal profit or CRA-related incentives. Between June 2016 and June 2017, more than 1700 U.S. bank branches were closed. Many branch closings occurred primarily in rural and low-income tract areas, raising concerns that banks would be able to circumvent their CRA obligation to lend and be evaluated in these areas. A traditional bank business model, however, relies primarily on having access to core deposits , a stable source of funds used to subsequently originate loans. Banks value geographic locations with greater potential to attract high core deposit volumes, which is also consistent with the CRA's requirement that assessment areas include at least one MSA or contiguous political subdivision (as previously discussed). Furthermore, using FDIC and U.S. Census Bureau data, the Federal Reserve noted that the number of branches per capita in 2017 was higher than two decades ago. Hence, determining whether branch closures reflect a bank's intentions to circumvent CRA compliance or to facilitate its ability to attract core deposits is challenging. On April 3, 2018, the U.S. Department of Treasury (Treasury) released recommendations to modernize CRA in a memorandum to the federal banking regulators (OCC, FCIC, and the Fed). Treasury highlighted four of its recommendations, summarized below. When the CRA was enacted in 1977, banks received deposits and made loans primarily through geographical branches. Assessment areas defined geographically arguably may not fully reflect the community served by a bank because of technology developments, such as the internet and mobile phone banking, prompting Treasury to call for revisiting the approach for determining banks' assessment areas. In 2016, the banking regulators issued Interagency Questions and Answers (Q&As) to provide banks guidance pertaining to CRA-eligible activities; however, Treasury noted that each regulator provides its examiners with additional guidance. Also, the Interagency Q&As illustrate past CRA-qualifying activities, but Treasury noted that no formal process currently exists to help determine whether potential (complex, innovative, or innovative) activities would qualify for CRA credit. Treasury recommends establishing clearer standards for CRA-qualifying activities and flexibility (expanding the types of loans, investments, and services that qualify for CRA credit), which may encourage banks to venture beyond activities that typically receive CRA credit. Treasury reports that each bank regulator follows a different examination schedule; the examinations are lengthy; and delays associated with the release of performance evaluations may limit the time banks can react to recommendations before their next CRA examination. Treasury recommends increasing the timeliness of the CRA examination process. Treasury recommends incorporating performance incentives that might result in more efficient lending activities. For example, CRA-qualifying loans may receive credit in the year of origination, but equity investments may receive credit each year that the investment is held. Treasury recommends consistent treatment of loans and investments, which may encourage banks to make more long-term loans (rather than sequences of short-term loans for the sake of being awarded CRA credits at each CRA examination). On August, 28, 2018, the OCC released an Advance Notice of Proposed Rulemaking (ANPR) to seek comments on ways to modernize the CRA framework. The ANPR solicited comments on the issues raised by Treasury among other things. The OCC's ANPR does not propose specific changes, but its content and the questions posed suggest that the OCC is exploring the possibility of adopting a quantitative metric-based approach to CRA performance evaluation, changing how assessment areas are defined, expanding CRA-qualifying activities, and reducing the complexity, ambiguity, and burden of the regulations on the bank industry. When the comment period closed on November 19, 2018, the OCC had received 1584 comments. The Federal Reserve and the FDIC did not join the OCC in releasing the ANPR. The Federal Reserve System, however, did host research symposiums around the country to gather comments pertaining to CRA reform. As reported by the Federal Reserve, some banking industry comments suggested, among other things, the need for consistency of the CRA examinations to facilitate CRA compliance. Yet some tailoring may still be necessary with respect to determining assessment areas that better reflect each bank's business models, particularly for models that use technology to deliver products and services. The regulators also heard from community and consumer groups. While expressing the need to retain focus on the historical context of the CRA, these groups highlighted the need to address issues pertaining to banking deserts in underserved communities. Community development investments (CDIs) that meet public welfare investment (PWI) requirements are those that promote the public welfare, primarily resulting in economic benefits for low- and moderate-income (LMI) individuals. This appendix provides examples of CDI activities that would qualify for consideration under the CRA investment test. In many cases, covered banks are more likely to take advantage of these optional vehicles to obtain CRA credits if they perceive the underlying investment opportunities to have profit potential. Loan Participations Banks and credit unions often use participation (syndicated) loans to jointly provide credit. When a financial firm (e.g., bank, credit union) originates a loan for a customer, it may decide to structure loan participation arrangements with other institutions. The loan originator often retains a larger portion of the loan and sells smaller portions to other financial institutions willing to participate. Suppose a financial firm originates a business or mortgage loan in a LMI neighborhood. A bank may receive CRA investment credit consideration by purchasing a participation, thus becoming a joint lender to the LMI borrower. An advantage of loan participations is that the default risk is divided and shared among the participating banks (as opposed to one financial firm retaining all of the risk). CRA consideration is possible if the activity occurs within the designated assessment area. For all participating banks to receive credit, some overlap in their designated assessment areas must exist. An exception is made for participations made to benefit designated disaster areas, in which all participating banks would receive CRA consideration regardless of location. State and Local Government Bonds State and local governments issue municipal bonds, and the proceeds are used to fund public projects, community development activities, and other qualifying activities. The interest that nonbank municipal bondholders receive is exempt from federal income taxes to encourage investment in hospitals, schools, infrastructure, and community development projects that require state and local funding. Legislative actions during the 1980s eliminated the tax-exempt status of interest earned from holdings of municipal bonds for banks. Although banks no longer have a tax incentive to purchase municipal bonds, they still consider the profitability of holding these loans, as they do with all lending opportunities. Furthermore, banks receive CRA investment consideration when purchasing state and local municipal bonds that fund public and community development projects in their designated assessment areas. CRA-Targeted Secondary Market Instruments Secondary market financial products have been developed to facilitate the ability of banks to participate in lending activities eligible for CRA consideration, such as purchasing mortgage-backed securities (MBSs) or shares of real estate investment trusts (REITs). A MBS is a pool of mortgage loans secured by residential properties; a multifamily MBS is a pool of mortgage loans secured by multifamily properties, consisting of structures designed for five or more residential units, such as apartment buildings, hospitals, nursing homes, and manufactured homes. CRA-MBSs are MBSs consisting of loans that originated in specific geographic assessment areas, thereby allowing bank purchases into these pools to be eligible for CRA consideration under the investment test. Similarly, REITs may also pool mortgages, mortgage MBSs, and real estate investments (e.g., real property, apartments, office buildings, shopping malls, hotels). Investors purchase shares in REIT pools and defer the taxes. Banks may only invest in mortgage REITs and MBS REITs. Similar to the CRA-MBSs, the REITs must consist of mortgages and MBSs that would be eligible for CRA consideration. The Community Development Trust REIT is an example of a REIT that serves as a CRA-qualified investment for banks. Community Development Financial Institutions and Equity Equivalent Investments The Community Development Financial Institutions (CDFI) Fund was created by the Riegle Community Development Regulatory Improvement Act of 1994 (the Riegle Act; P.L. 103-325 ). The CDFI Fund was established to promote economic development for distressed urban and rural communities. The CDFI Fund, currently located within the U.S. Department of the Treasury, is authorized to certify banks, credit unions, nonprofit loan funds, and (for-profit and nonprofit) venture capital funds as designated CDFIs. In other words, a bank may satisfy the requirements to become a CDFI, but not all CDFIs are banks. The primary focus of institutions with CDFI certification is to serve the financial needs of economically distressed people and places. The designation also makes these institutions eligible to receive financial awards and other assistance from the CDFI Fund. In contrast to non-CDFI banks, some CDFI banks have greater difficulty borrowing funds and then transforming them into loans for riskier, economically distressed consumers. The lack of loan level data for most CDFI banks causes creditors to hesitate in making low-cost, short-term loans to these institutions. Specifically, the lack of information on loan defaults and prepayment rates on CDFI banking assets is likely to result in limited ability to sell these loan originations to secondary loan markets. Consequently, the retention of higher-risk loans, combined with limited access to low-cost, short-term funding, makes CDFI banks more vulnerable to liquidity shortages. Hence, CDFIs rely primarily on funding their loans (assets) with net assets , which are proceeds analogous to the equity of a traditional bank or net worth of a credit union. CDFI net assets are often acquired in the form of awards or grants from the CDFI Fund or for-profit banks. Funding assets with net assets is less expensive for CDFIs than funding with longer-term borrowings. Banks may obtain CRA investment credit consideration by making investments to CDFIs, which provides CDFIs with net assets (equity). Under PWI authority, banks are allowed to make equity investments in specialized financial institutions, such as CDFIs, as long as they are considered by their safety and soundness regulator to be at least adequately capitalized . Furthermore, the final Basel III notification of proposed regulation (NPR) allows for preferential capital treatment for equity investments made under PWI authority, meaning equity investments to designated CDFIs may receive more favorable capital treatment. Consequently, banks often provide funds to CDFIs through equity equivalent investments (EQ2s), which are debt instruments issued by CDFIs with a continuous rolling (indeterminate) maturity. EQ2s, from a bank's perspective, are analogous to holding convertible preferred stock with a regularly scheduled repayment. Hence, banks may view EQ2s as a potentially profitable opportunity to invest in other specialized financial institutions and receive CRA consideration, particularly when the funds are subsequently used by CDFIs to originate loans in the banks' assessment areas. Small Business Investment Companies The Small Business Administration (SBA) was established in 1953 by the Small Business Act of 1953 (P.L. 83-163) to support small businesses' access to capital in a variety of ways. Although issuing loan guarantees for small businesses is a significant component of its operations, the SBA also has the authority to facilitate the equity financing of small business ventures through its Small Business Investment Company (SBIC) program, which was established by the Small Business Investment Act of 1958 (P.L. 85-699). SBICs that are licensed and regulated by the SBA may provide debt and equity financing and, although not a program requirement, educational (management consulting) resources for businesses that meet certain SBA size requirements. Banks may act as limited partners if they choose to provide funds to SBICs, which act as general partners. Banks may establish their own SBICs, jointly establish SBICs (with other banks), or provide funds to existing SBICs. SBICs subsequently use bank funding to invest in the long-term debt and equity securities of small, independent (SBA-eligible) businesses, and banks may receive CRA investment consideration if the activities benefit their assessment areas. Community banks invest in SBICs because of the profit potential as well as the opportunity to establish long-term relationships with business clients during their infancy stages. Banks that are considered by their regulators to be adequately capitalized are allowed to invest in these specialized financial institutions under PWI authority, but the investments still receive risk-based capital treatment. SBIC assets, similar to CDFIs, are illiquid given the difficulty to obtain credit ratings for SBIC investments; thus, they cannot be sold in secondary markets. Because banks risk losing the principal of their equity investments, they are required to perform the proper due diligence associated with prudent underwriting. Tax Credits The low-income housing tax credit (LIHTC) program was created by the Tax Reform Act of 1986 ( P.L. 99-514 ) to encourage the development and rehabilitation of affordable rental housing. Generally speaking, government (federal or state) issued tax credits may be bought and, in many cases, sold like any other financial asset (e.g., stocks and bonds). Owners of tax credits may reduce their tax liabilities either by the amount of the credits or by using the formulas specified on those credits, assuming the owners have participated in the specified activities that the government wants to encourage. For LIHTCs, banks may use a formula to reduce their federal tax liabilities when they provide either credit or equity contributions (grants) for the construction and rehabilitation of affordable housing. If a bank also owns a LIHTC, then a percentage of the equity grant may be tax deductible if the CDFI uses the funds from the grant to finance affordable rental housing. Furthermore, banks may receive consideration for CRA-qualified investment credits. After a domestic corporation or partnership receives designation as a Community Development Entity (CDE) from the CFDI Fund, it may apply for New Markets Tax Credits (NMTCs). Encouraging capital investments in LMI communities is the primary mission of CDEs, and CDFIs and SBICs automatically qualify as CDEs. Only CDEs are eligible to compete for NMTCs, which are allocated by the CDFI Fund via a competitive process. Once awarded an allocation of NMTCs, the CDE must obtain equity investments in exchange for the credits. Then, the equity proceeds raised must either be used to provide loans or technical assistance or deployed in eligible community investment activities. Only for-profit CDEs, however, may provide NMTCs to their investors in exchange for equity investments. Investors making for-profit CDE equity investments can use the NMTCs to reduce their tax liabilities by a certain amount over a period of years. As previously discussed, a bank may receive CRA credit for making equity investments in nonprofit CDEs and for-profit subsidiaries, particularly if the investment occurs within the bank's assessment area. Furthermore, banks may be able to reduce their tax liabilities if they can obtain NMTCs from the CDEs in which their investments were made.

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