The nation’s top regulator of federally chartered banks failed to appear before a House committee’s oversight hearing with other regulators Wednesday, leaving his written statement to speak for him on a variety of key issues, including reform of Community Reinvestment Act (CRA) rules.
Joseph P. Otting, head of the Office of the Comptroller of the Currency (OCC), may be called to testify alone in the near future, said Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee, who called his written statement no “substitute” for an in-person appearance.
(In the brief video, House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) discusses potential Community Reinvestment Act (CRA) regulation changes with Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams.)
In his written statement, Otting said he hoped to see a joint proposed rule on CRA issued by the OCC and the Federal Deposit Insurance Corp. (FDIC) by the end of the year, and further that the Federal Reserve, which has so far declined to sign on the proposed rule, will be a party to any joint final rule.
Otting, in his written statement, outlined his views on what the proposed rule should do, as follows:
- First, the proposal should clarify what counts for CRA credit by articulating clear standards and requiring the agencies to publish an illustrative list of qualifying activities.
- Second, it should update how banks define their assessment areas by retaining areas surrounding branches and adding additional assessment areas where banks draw large amounts of their deposits. This would maintain the importance of branches in meeting community needs and capture banks with large scale activities outside their facility-based network.
- Third, the proposed rule should require examiners to evaluate CRA performance more objectively by assessing the distribution of retail lending as well as the impact of CRA activity. It should require examiners to assess what portion (number of units) of a bank’s retail lending is targeted to LMI [low- to moderate-income] individuals and LMI areas as well as require examiners to evaluate impact by comparing the dollar value of a bank’s CRA-qualifying activity (lending, investment, and services) with its retail deposits in each assessment area and at the overall bank level.
- Fourth, the proposal should improve the transparency and timeliness of reporting. He stated that better reporting would allow stakeholders and bankers to gauge CRA performance throughout the evaluation cycle and speed up regulatory decision making.
“I believe we need to make CRA regulations stronger, work better for everyone, and encourage more lending, investment, and services by making four basic but important changes to the regulations,” he stated in his testimony.
FDIC Chairman Jelena McWilliams has indicated her agency is generally on board with going in on the joint proposal. Meanwhile, Federal Reserve Board Chairman for Supervision Randal Quarles urged against getting “too wrapped around the axle” over the Fed’s not signing on at this stage. While all three agencies aren’t in agreement now, “we’ll get there,” he said.
Rodney Hood, Chairman, National Credit Union Administration
Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation
Randal Quarles, Vice Chairman of Supervision, Board of Governors of the Federal Reserve System
Joseph M. Otting, Comptroller, Office of the Comptroller of the Currency