OCC Proposes Rescinding 2020 Amendments to CRA Regulation; Coordinated Agency Regulations Coming

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (OCC) released an interagency statement on July 20, 2021 that all three agencies will act together to revise their regulations implementing the Community Reinvestment Act (CRA).  The OCC also announced that it plans to propose rescinding the amendments to its CRA regulations that were adopted on May 20, 2020, under former Comptroller Joseph Otting, a President Trump appointee.

The joint statement announced that the three agencies “are committed to working together to jointly strengthen and modernize regulations implementing” the CRA.  The three agencies said that they “have broad authority and responsibility for implementing the CRA” and that joint action “will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods.”

In May 2020, the OCC unilaterally released a final rule incorporating changes made to modernize the agencies regulations under the CRA.  The 2020 final rule, which applied to national banks and federal savings associations, was designed to reflect changes in the banking industry while encouraging institutions to meet the credit needs of local communities.  The 2020 final rule was designed to increase bank CRA-related lending, investment, and services in low- and moderate-income communities where there was significant need for credit, more responsible lending, and greater access to banking services.  Changes in the 2020 final rule included increased credit for mortgage origination of affordable housing in low- and moderate-income areas, and clarifying credit for athletic facilities to ensure they benefitted and supported low- and moderate-income areas.

The OCC’s recent announcement proposing to rescind the 2020 final rule followed a review by President Biden-appointed Acting Comptroller of the Currency Michael Hsu conducted shortly after he took office.  Acting Comptroller Hsu stated that the CRA must be further “strengthened and modernized” to ensure fairness in banking.

“The disproportionate impacts of the pandemic on low and moderate income communities, the comments provided on the Board’s Advanced Notice of Proposed Rulemaking, and our experience with implementation of the 2020 rule have highlighted the criticality of strengthening the CRA jointly with the Board and FDIC.  While the OCC deserves credit for taking action to modernize the CRA through adoption of the 2020 rule, upon review I believe it was a false start.  This is why we will propose rescinding it and facilitating an orderly transition to a new rule.  I look forward to working with the other agencies to develop a joint Notice of Proposed Rulemaking and building on the ANPR proposed by the Board in September 2020.”

The CRA was enacted in the 1970s to deter lending discrimination.  It requires the Federal Reserve, FDIC and OCC to encourage financial institutions to help meet the credit needs of communities in which they do business, including low- and moderate-income neighborhoods.

The agencies did not announce details of when they might issue a joint proposal.  LenderLaw Watch will continue to monitor forthcoming details concerning the agencies’ overhaul of CRA regulations.