Comptroller hears, repeatedly, complaints from lawmakers about 60-day comment period for CRA revisions

Despite repeated calls from Democratic lawmakers to extend the comment period of proposed revised rules implementing anti-redlining laws, the regulator who is recommending the changes had a short reply: No.

In questioning following testimony before the House Financial Services Committee Wednesday, Comptroller of the Currency Joseph M. Otting maintained that the comment deadline of March 9 is 88 days after the proposal’s initial release in mid-December.

However, he also pointed out, the proposal was not published in the Federal Register (as required under law) until Jan. 9 – 60 days before the end of the comment period. He indicated that is plenty of time to gather comments.

However, panel Democrats – including committee Chairwoman Maxine Waters (D-Calif.) – told Otting that a 120-day comment period would be more relevant to the proposal, which (if adopted) would be the first large-scale overhaul of rules implementing the Community Reinvestment Act (CRA) since its inception in the late 1970s.

The Office of the Comptroller of the Currency (OCC), along with the Federal Deposit Insurance Corp. (FDIC), issued the proposal to revise CRA rules in mid-December. According to the agencies, their 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, the agencies said, are aimed at encouraging banks to serve their entire communities, including low- to moderate-income neighborhoods, more effectively through a clearer set of CRA activities, and to provide clarity for all stakeholders.

In her opening questions to Otting, Waters asserted that the 60-day comment period was too short. She suggested that the OCC has previously issued proposed rules on bank capital for up to 120 days, and noted that the committee has requested that the OCC consider a longer comment period for the CRA rule revisions.

“What have you decided,” Waters asked, pointedly. Otting told her that the OCC “won’t extend the comment period.”

“So, you don’t consider it important enough for 120 days,” Waters responded.

In later questions, Rep. Nydia Velázquez (D-N.Y.) asked Otting if he would consider delaying the comment period until the Federal Reserve signs on to the proposal, or until advocates of existing CRA rules have been “sufficiently heard.”

Otting again replied no, referring to both conditions.

In still further questioning, Rep. Gregory Meeks (D-N.Y.) told Otting that lawmakers were seeking a longer comment period “because it (CRA) affects so many people.” “What’s the rush,” Meeks asked. (Otting had no response.)

Rep. Brad Sherman (D-Calif.) told Otting it was “distressing” that the comptroller would not listen to Congress about timing on when to end the comment period. “It shows a contempt for this committee,” Sherman said.

During his testimony, Otting said the proposed regulation would make four basic “but important” changes to existing rules:

  • Clarify what counts for CRA credit by articulating clear standards and requiring the agencies to publish an illustrative list of qualifying activities.
  • 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,” Otting said.
  • Require examiners to evaluate CRA performance more objectively by assessing the distribution of retail lending as well as the impact of CRA activity. He said the proposal would assess what portion (number of units) of a bank’s retail lending is targeted to LMI individuals and areas as well evaluate the impact of a bank’s CRA-qualifying activities by comparing the dollar value of a bank’s CRA-qualifying activity with its retail domestic deposits in each assessment area and at the overall bank level.
  • Improve the transparency and timeliness of reporting. “Better reporting for banks subject to the new evaluation method would allow stakeholders and bankers to gauge CRA performance throughout the evaluation cycle, speed up regulatory decision making, and reduce the time necessary to produce Performance Evaluations at the conclusion of CRA examinations,” Otting said.

Testimony, Comptroller Joseph Otting on proposed CRA regulation revisions