OCC makes it final: 2020 CRA is no more; ’95 rules now in effect for all banking agencies

Rescinding anti-redlining rules adopted in 2020 – and replacing them with a regulation based on those issued by it and fellow federal bank agencies in 1995 – is the aim of a final rule issued Tuesday by the national bank regulator.

The Office of the Comptroller of the Currency (OCC) said the actions of rescinding and replacing changes to rules implementing the Community Reinvestment Act (CRA) were intended to “facilitate the ongoing interagency work to modernize the CRA regulatory framework and promote consistency for all insured depository institutions.”

“Throughout all of the agencies’ (OCC, Federal Reserve, and Federal Deposit Insurance Corp. [FDIC]) CRA modernization efforts, stakeholders have repeatedly stressed the importance of the agencies issuing a single set of CRA rules applicable to all IDIs (insured depository institutions),” the OCC wrote in the background section of its final rule. “This final rule is an important step in this interagency process because it reestablishes generally uniform rules that apply to all IDIs. Thus, it better positions the agencies to identify joint solutions to the common issues affecting IDIs and the communities they serve.”

The final rule takes effect Jan. 1 for national banks and both federal and state savings associations, the OCC said.

In September, the agency issued its proposal to rescind the June 2020 regulation, which was issued without the participation of the Federal Reserve or the FDIC. The proposal followed a joint statement issued by all three agencies in July that they have broad authority for implementing the CRA, and which indicated that working together would be the better approach. “Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods,” the agencies stated.

The 2020 OCC rule was finalized under the leadership of then-Comptroller Joseph P. Otting. That process began with an advance notice of proposed rulemaking (ANPR) in 2018 and was joined in the proposed rulemaking last year by the FDIC. Only the OCC, however, was party to the final rule issued in May 2020.

Otting resigned the day the OCC rule was finalized. That rule left the banking industry with two sets of federal CRA rules: one, last revised 25 years ago, that applies to banks primarily supervised by the Fed and the FDIC; and one for OCC-supervised banks, though the OCC noted that full compliance with the rule changes wouldn’t be required until 2023.

The reform of the CRA rules, according to the OCC in 2020, was designed to create more descriptive and expansive criteria for the types of activities that qualify for CRA credit. Among other things, the new rule was constructed to provide “defined criteria” that identify the types of activities that meet the credit needs of banks’ communities and, thus, can be considered qualifying activities.

The rule would have also required the regulator to publish periodically a list of non-exhaustive, illustrative examples of qualifying activities; and establish a process for stakeholders to seek agency determination if an activity is a qualifying activity.

Industry reaction last year to the 2020 rule was muted, with at least one group citing concern “about key provisions of the final rule including the substance & complexity of the performance measurement benchmarks, which will present significant data collection challenges for banks,” adding that banks “still have many questions.”

OCC Issues Final Rule to Rescind its 2020 Community Reinvestment Act Rule