Comptroller revises guidelines for seeking designations for CRA purposes

Guidelines for national banks, federal savings associations, and federal branches of foreign banking organizations seeking designations as a wholesale or limited purpose bank for Community Reinvestment Act (CRA) purposes, or requesting confirmation of an exemption as a special purpose bank exempt from CRA regulations, were issued Wednesday in a bulletin by the Office of the Comptroller of the Currency (OCC).

The OCC said the bulletin also rescinds and replaces an attachment to OCC Bulletin 1996-11, “Community Reinvestment Act: Guidelines for Requesting Designation as a Wholesale or Limited-Purpose Institution.”

Provided in the guidelines, among other things, are information that a bank should provide to substantiate its request; instructions on how to submit requests; and the OCC’s review and approval processes, as applicable.

The bulletin (2019-40) notes that banks are evaluated under the CRA on the basis of the product lines they offer in the normal course of business. Accordingly, designated wholesale banks engaged in only incidental retail lending and designated limited purpose banks offering a narrow product line to a regional or broader market are assessed under the community development test provided in the CRA regulations. The community development test evaluates a bank’s record of meeting the credit needs of its assessment area through community development lending, qualified investments, or community development services.

To receive a designation as a wholesale or limited purpose bank for CRA purposes, a bank must file a request in writing with the OCC at least three months before the proposed effective date of the designation.

The CRA regulations exclude from coverage certain special purpose banks that do not perform commercial or retail banking services by granting credit to the public in the ordinary course of business, other than as incidental to their specialized operations. These banks include banker’s banks, as defined in 12 USC 24(Seventh), and banks that engage only in one or more of the following activities: providing cash management controlled disbursement services or serving as correspondent banks, trust companies, or clearing agents.

A bank that seeks confirmation of the CRA exemption for special purpose banks should submit its request in writing to the OCC, as described in the “Filing Guidelines,” “Preparation and Submission of Request,” and “Designation Request” sections of this bulletin.

The bulletin details guidelines for preparing and submitting requests, as well as information for showing how a bank satisfies the designation sought.

OCC Bulletin 2019-40