An Act Concerning Community Reinvestment By Banks And Credit Unions.
Summary
SB 1398 revises Connecticut’s community reinvestment laws for banks and credit unions. It updates definitions and standards used by the Banking Commissioner to evaluate whether institutions are meeting the credit needs of their communities, with explicit attention to low- and moderate-income neighborhoods, minority-owned businesses, and women-owned businesses. The bill also aligns state review more closely with federal Community Reinvestment Act methodology and requires written public and confidential performance evaluations for banks.
For banks, the bill directs the commissioner to assess community reinvestment performance during examinations and to consider factors such as escrow account offerings, efforts to work with delinquent mortgage borrowers who are unemployed or underemployed, and public comments. It also ties approval of certain bank transactions, mergers, acquisitions, and related applications to an institution’s CRA record and, when needed, to a community service plan that must be made available for public inspection and comment. Similar reinvestment obligations and evaluation criteria are added or updated for community credit unions, including assessment areas, lending patterns, community development services, and complaint responses.
Impact
The bill amends Connecticut General Statutes sections 36a-30 through 36a-37a, effective October 1, 2025, and expands the framework the Banking Commissioner uses to review banks and community credit unions for community reinvestment performance. It strengthens the role of CRA-style evaluations in licensing, merger, acquisition, and other approval decisions, and it formalizes public-comment procedures and reporting requirements. The bill also clarifies statutory definitions for minority-owned and women-owned businesses and updates related community reinvestment criteria for both banks and credit unions.
Sentiment
The available voting history shows strong support: the bill received a 12-0 Joint Favorable Substitute vote in committee. The text and committee record suggest broad agreement on the goal of encouraging lending and services in underserved communities and on updating state law to better track federal CRA concepts. No committee transcript excerpts were provided, so there is no recorded debate in the supplied materials indicating organized opposition.
Contention
The main policy tension in the bill is between expanding community reinvestment expectations and preserving the safe-and-sound operation of banks and credit unions. The bill repeatedly qualifies commissioner review by reference to safety and soundness, and it allows exemptions or alternative filings for certain “eligible entities,” reflecting concern about burdening well-capitalized, compliant institutions. Another possible point of contention is the bill’s emphasis on minority-owned and women-owned businesses and on public comment in transaction approvals, which could draw scrutiny from institutions concerned about regulatory discretion, compliance costs, or the scope of community-service obligations.