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Update to the Community Reinvestment Act

The Office of the Comptroller of the Currency (OCC) today released a final rule strengthening and modernizing the agency’s regulations under the Community Reinvestment Act (CRA).

The final rule will increase bank CRA-related lending, investment, and services in low- and moderate-income communities where there is significant need for credit, more responsible lending, and greater access to banking services. The final rule reflects careful consideration of the more than 7,500 comments stakeholders submitted in response to the notice of proposed rulemaking announced on December 12, 2019. The OCC made several changes to the proposal that respond to stakeholders’ comments, including:

  • Clarifying the importance of the quantity and quality of activities as well as their value.
  • Increasing credit for mortgage origination to promote availability of affordable housing in low- and moderate-income areas.
  • Clarifying credit for athletic facilities to ensure they benefit and support low- and moderate-income communities.
  • Deferring establishment of thresholds for grading banks’ CRA performance and delineating banks’ deposit-based assessment areas until the OCC assesses improved data required by the final rule.

In a letter from April 8, the National Housing Conference responded to proposed changes to CRA rulemaking, stating that “we have no idea how severely the pandemic will impact our economy, the financial system and communities throughout the nation. Committing resources to regulatory initiatives that do not directly support our national response to the COVID-19 pandemic is a dangerous distraction.”

On April 27, NHC joined 14 other major national organizations, including the National Association of REALTORS and the National League of Cities, to urge regulators to refrain from “committing resources to regulatory initiatives that do not directly support our national response to the COVID-19 pandemic.”

FDIC Chairman Jelena McWilliams noted in her March 19 letter to the Financial Accounting Standards Board, financial institutions “will face unique difficulties over the coming weeks and months to adequately staff customer-facing functions; ensure that deposit, loan, and IT systems operate normally; help borrowers that are experiencing unanticipated cash flow difficulties; and address the earnings and capital implications of near zero percent interest rates and a potential surge in borrowers who are unable to meet contractual payment terms.”

Blake Paulson, the new Chief National Bank examiner with the Office of the Comptroller of the Currency (OCC) and senior deputy comptroller for midsize and community bank supervision, recently spoke with Law360 on the OCC’s plan beyond the coronavirus, detailing the steps the agency and banks can take to prepare for the next financial downturn.

According to Paulson, one of the most significant priorities of the OCC has been strengthening the CRA regulation.

“We've done a tremendous amount of work to first put out an advanced notice of proposed rulemaking to request, which was a series of questions on the CRA and then a proposed rule. Now we've gotten all those comments back, and we're working on drafting the final rule. We expect that, working in conjunction with the FDIC [Federal Deposit Insurance Corporation], we will release a final rule this year."

The final CRA rule applies to national banks and savings associations, which conduct the majority of all CRA activity.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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