Joint CRA rule proposal coming soon from Fed, FDIC, OCC, acting comptroller says

A notice of proposed rulemaking on modernized Community Reinvestment Act (CRA) requirements will be released jointly in the “not-too-distant future” by the three federal bank regulators, the Acting Comptroller of the Currency said Monday.

Michael J. Hsu, acting comptroller at the Office of the Comptroller of the Currency (OCC), said in a speech that the proposed rule being crafted by the OCC, Federal Reserve, and Federal Deposit Insurance Corp. (FDIC) is being built upon the framework of the Fed’s advance notice of proposed rulemaking (ANPR). That ANPR came four months after the OCC’s May 2020 issuance, alone and without any other agency participation, of a final rule (by former Comptroller Joseph Otting) that has since been rescinded by Hsu.

Hsu, in Monday’s prepared remarks for a meeting of the National Community Reinvestment Coalition (NCRC), noted that several “overarching objectives” are guiding regulators’ effort on the coming proposed update.

Hsu said that from his perspective, “it is important that revised CRA regulations result in increased levels of CRA activity” to help address persistent disparities in wealth and access to financial services in low- to moderate-income communities, and which are most prevalent for Black, Hispanic, and Native American communities and borrowers. “At the same time,” he said, “we need to ensure that banks are engaging with and being responsive to local stakeholders and the local needs of LMI communities, not just applying one-size fits all solutions. In short, the new CRA regulations should ensure more and better CRA investments.”

The acting comptroller added that he believes regulators should also increase the clarity, consistency, and transparency of their CRA supervisory expectations and standards regarding which activities are eligible for CRA credit, and how eligible activities are evaluated and assessed; and update the CRA standards to reflect changes in the business of banking, in particular the increased use of mobile and internet delivery channels.

Acting Comptroller Discusses Modernization of the Community Reinvestment Act