The comment period on proposed anti-redlining reform by the federal regulator of national banks and the federal insurer of banks deposits started Thursday and runs to March 9, according to a notice published in the Federal Register.
According to the notice published by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC), the 62-page proposal notes that the agencies recognized the need for modernizing existing rules promulgated to implement the Community Reinvestment Act (CRA), which was enacted in the 1970s to encourage banks and savings associations to help meet the needs of borrowers in their communities, including low- and moderate-income (LMI) neighborhoods.
The proposal cites 2018 Treasury Department recommendations on methods to modernize CRA recommendations. According to the Register notice, the recommendations included updating the definition of assessment areas, increasing the clarity and transparency of CRA ratings, improving the timeliness of evaluations, and incorporating more effective incentives to encourage banks to meet the credit and deposit needs of their communities.
The OCC/FDIC proposal, according to the notice, based on those recommendations, would “strengthen the CRA regulatory framework to better achieve the underlying statutory purpose of encouraging banks to help serve their communities by making the framework more objective, transparent, consistent, and easy to understand.”
The agencies said the proposal would clarify which activities qualify for CRA credit; update where activities count for CRA credit; create a more objective method for measuring CRA performance; and provide for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting. “These changes would encourage banks to serve their entire communities, including LMI neighborhoods, more effectively through a clearer set of CRA activities and would provide clarity for all stakeholders,” the notice states.
The Federal Reserve, which also enforces the CRA for banks it supervises through its own set of rules, has not joined with its sister federal banking agencies in proposing the reforms. Wednesday, Federal Reserve Board Gov. Lael Brainard laid out the Fed’s view of reform. She said the central bank stands firm in its goal of ensuring any reform of rules governing banks’ CRA requirements remains true to the statute. She said the Fed is banking on input from the public to help ensure the best outcome possible for any final rule.
The Fed has not yet formally released its own reform proposal.