Proposed revisions to regulations enforcing anti-redlining laws will be the focus of an oversight hearing next week by a House committee and featuring the top regulator of national banks, according to a memo released by the panel Friday.
The House Financial Services Committee hearing set for Wednesday (10 a.m.) will feature Comptroller of the Currency Joseph M. Otting as the only witness. Otting’s agency (the Office of the Comptroller of the Currency [OCC]) has proposed sweeping revisions of the Community Reinvestment Act (CRA), which encourages financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods.
The law was enacted in the 1970s in the wake of redlining by banks. (Redlining has been described as the practice of banks discriminating against prospective customers based primarily on where they live, or their racial or ethnic background, rather than creditworthiness.)
The Federal Deposit Insurance Corp. (FDIC) has proposed similar revisions to CRA rules. The Federal Reserve, the third agency with CRA enforcement responsibilities, has not yet issued a proposal, but has indicated interest in making at least some changes.
The hearing – titled “The Community Reinvestment Act: Is the OCC Undermining the Law’s Purpose and Intent?” – was called, according to the memo, to “examine the OCC’s work on the Community Reinvestment Act, as well as other supervisory and regulatory developments.”
The memo also, pointedly, notes that the OCC was the only federal financial institution regulator absent from a Dec. 5 hearing by the committee (although it also notes that Otting provided written testimony to the committee).
Further, the memo states that “significant concerns” have been raised by “community stakeholders with the OCC’s process and proposal to reform the CRA,” as evidenced during a subcommittee hearing held two weeks ago. “At the hearing, witnesses raised concerns about the rulemaking process, including the 60-day length of the public comment period,” the memo states. “Some witnesses urged the OCC and FDIC to withdraw the proposal and to better consult with civil rights and community organizations that will be significantly impacted by the proposal.”
The memo also states that “other supervisory and regulatory” developments to be discussed at the hearing include applicability of state usury caps, capital and liquidity requirements for large banks, the Volcker Rule, and the swap margin proposal (which would, as proposed, exempt uncleared swaps with inter-affiliates from initial margin requirements, while keeping variation margin requirements).
HFSC memo: “The Community Reinvestment Act: Is the OCC Undermining the Law’s Purpose and Intent?”