The national bank public welfare investment authority (12 CFR 24 or “Part 24”) facilitates making investments not otherwise expressly permitted under the National Bank Act. The investment authority provided under Part 24 allows banks to commit capital for much-needed community and economic development projects. These public welfare investments primarily benefit low- and moderate-income (LMI) individuals, LMI areas, or areas targeted by a government entity for redevelopment, or are qualified investments under the Community Reinvestment Act (CRA). Many of these investments serve the dual purpose of helping banks meet their CRA goals. For over 40 years, national banks have been using the public welfare investment authority to make investments in essential activities, such as creating affordable housing and supporting other residential and commercial real estate development; providing equity for small business start-ups and expansions; and revitalizing or stabilizing government-designated development areas.
In 2003, Part 24 was expanded to include investments that would receive consideration under 12 CFR 25.23 (CRA) as “qualified investments.” In 2005, CRA was modified to include:
- Activities to revitalize or stabilize designated disaster areas eligible for CRA consideration.
- Activities to revitalize or stabilize distressed nonmetropolitan middle-income geographies eligible for CRA consideration.
- Activities to revitalize or stabilize underserved nonmetropolitan middle-income geographies eligible for CRA consideration.
Investment activities which revitalize or stabilize the above-referenced geographies are now eligible under Part 24.
For further information and clarification on these modifications, visit http://www.occ.gov/topics/community-affairs/resource-directories/public-welfare-investments/common-part-24-questions.html.