The OCC adopted a final rule intended to "strengthen and modernize" Community Reinvestment Act ("CRA") regulations.
As previously covered, the OCC and the FDIC originally proposed amendments to the regulations implementing the CRA, a law requiring that insured depository institutions help meet community credit needs. The last major revisions to CRA regulations were made in 1995.
According to the OCC, the final rule will (i) expand and make clearer "qualifying activities," which include bank lending and investing, (ii) revise the delineation of "assessment areas," (iii) provide more "consistent and objective" methods for assessing CRA performance, and (iv) mandate "timely and transparent" reporting. The amendments are also intended to provide banks with greater incentives to reach specific performance benchmarks and to be more objective.
Statements
OCC Comptroller of the Currency Joseph M. Otting stated that the final rule (i) bolsters the regulatory framework of the CRA and (ii) clarifies the criteria and qualifications for CRA consideration and performance, in addition to the definitions of "assessment areas." Mr. Otting stated that the OCC is cognizant of the dearth of existing CRA performance data and asserted that it will wait to set CRA performance thresholds for grading banks until it has more access to improved data, as stipulated in the final rule.
FDIC Chair Jelena McWilliams stated that while the FDIC "strongly supports" the multi-year joint effort to modernize and clarify the CRA regulations, the agency is not ready at this point in time to finalize the CRA amendments. Chair McWilliams noted that there are "many provisions in [this] final rule that will greatly benefit low- and moderate-income communities, and provide greater clarity to banks on CRA expectations."
The rule will go into effect on October 1, 2020. Banks must comply with the final rule by October 1, 2020, January 1, 2023, or January 1, 2024, as applicable. Appendix C of part 25 of the final rule expires on January 1, 2024.
Originally published May 21, 2020
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