Otting makes video pitch for proposed changes to anti-redlining rules

Taking his case to web video, the regulator of national banks said Monday that his proposal to rewrite anti-redlining rules for banks is based on his view that “we need rules that encourage banks to serve” people who do their banking remotely.

In a brief (45-second) video posted on YouTube Monday, Comptroller of the Currency Joseph M. Otting said the proposal rewriting rules implementing the Community Reinvestment Act (CRA) would gauge how well banks serve customers who are outside of their banks’ branch networks. “Please read the proposal and provide your comments to help us make the CRA rules the best they can be.”

Last week, the Office of Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) released a joint proposal to rewrite their CRA rules. According to the two agencies, the proposal attempts to achieve four outcomes:

  • Clarify what counts for CRA credit by articulating clear standards and requiring agencies to publish an illustrative list of qualifying activities.
  • Preserve assessment areas in the local areas around branches and require banks that draw a large portion of their deposits outside of their facilities-based assessment areas to designate additional assessment areas wherever they have significant concentrations of deposits.
  • Evaluate CRA performance more objectively by assessing what portion of a bank’s retail lending is targeted to LMI individuals and areas as well as measuring the impact of that activity by comparing the value of a bank’s CRA qualifying activity with its deposits in each assessment area and at the overall bank level.
  • Improve the transparency and timeliness of reporting.

The proposed rule also allows small banks (those with $500 million or less in total assets) the option to continue to be evaluated under the current CRA small bank test or opt in to the new general performance standards.

In a statement last week, Otting called the proposal “an important step toward making CRA work better for everyone and reflects more than 18 months of work by dozens of dedicated staff at the federal banking agencies and thousands of stakeholders who have advocated for improvements in the current framework that was last updated in 1995.”

The “comments” option for the video has been deactivated.