‘Modernizing’ rules to implement CRA tops comptroller’s priorities for new year

“Modernizing” the regulatory approach to evaluating bank and thrift performance under anti-redlining laws, with the aim to “encourage more lending and investment where they are needed most,” is at the top of priorities listed by the comptroller of the currency in its 2018 annual report.

Comptroller Joseph M. Otting, in his priorities listed in the Office of the Comptroller of the Currency’s (OCC) annual report, said that regulations implementing the Community Reinvestment Act (CRA) have become “cumbersome, complex, and outdated.”

“Regulations have failed to keep up with the evolution of how banks deliver services, especially because of interstate branching and the digitization of services,” Otting wrote. He charged that other drawbacks of current regulation include performance evaluations are that they take too long, lack transparency, and “suffer from subjectivity that causes inconsistency from bank to bank.”

“This inefficiency wastes resources and frustrates community members, bankers, and regulators alike,” he wrote.

The comptroller said modernizing regulations applying the four-decades-old law would increase bank lending, investment, and services “where they are needed most”; establish a “metric-based framework” for assessing CRA performance; expand and clarify activities eligible for CRA consideration; and “make evaluations more transparent, objective, and timely.”

Other priorities outlined by Otting include:

  • Address short-term, small-dollar credit offerings by banks;
  • Reduce regulatory burden of compliance with Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements;
  • Simplify the Volcker Rule and regulatory capital requirements;
  • Encourage “responsible innovation” in banking, including through accepting applications for national bank charters from nondepository financial technology (fintech) companies;
  • Reduce costs incurred by the agency as it regulates the banking system.

OCC 2018 Annual Report: Comptroller’s Viewpoint