A letter urging suspension of efforts to revise Community Reinvestment Act (CRA) rules during the coronavirus (COVID-19) pandemic, and urging a new effort that also includes the Federal Reserve once this crisis passes, was sent Wednesday to federal banking regulators by House Financial Services Committee Democrats.
The letter was sent on the last day of the public comment deadline – April 8 – set for the proposal issued in late December by the Office of the Comptroller of the Currency (OCC) and the (Federal Deposit Insurance Corp. (FDIC).
“At a time when regulators should be working together to appropriately respond to this growing pandemic and keep our banking system safe and sound, unrelated rulemaking should be put on hold for the time being,” the lawmakers wrote in a letter to Comptroller of the Currency Joseph P. Otting and FDIC Chairman Jelena McWilliams. “To that end, we urge you to delay any unrelated rulemakings, including the Notice of Proposed Rulemaking (NPRM) with respect to the Community Reinvestment Act (CRA), during the ongoing crisis. After the crisis passes, we urge your agencies to work with the Federal Reserve to develop a new, joint NPRM that is consistent with the purpose of the Community Reinvestment Act.”
The OCC and the FDIC are the only banking regulators involved in the current proposal to revamp the anti-redlining CRA rules. The Federal Reserve Board did not sign onto the proposed rule, and Fed Chair Jerome Powell has said he was not sure when that would happen.
Wednesday’s letter, led by panel Chairwoman Maxine Waters (D-Calif.), also takes issue with provisions of the current proposed rule, which the lawmakers wrote “dilutes the focus of CRA on meaningful investments in LMI (low and moderate-income) communities and small businesses.” They also said the OCC and the FDIC have not conducted sufficient data-driven analysis of the impact of the proposed rule and noted concerns over the agencies’ inability to achieve a consensus with the Fed on the proposed rule, which lawmakers said “will create further uncertainty for the financial institutions you regulate, and only heighten the potential for a harmful race to the bottom of lax CRA standards that will ultimately hurt consumers.”