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OCC to Propose Rescission of 2020 CRA Rulemaking, Will Collaborate with FRB and FDIC on New Rule

Daniel.Meade@cwt.com's picture
Commentary by Daniel Meade

The OCC will propose rescinding a 2020 rulemaking that amended regulation implementing the Community Reinvestment Act ("CRA") for national banks. This decision followed the completion of a review initiated in May 2021 by Acting Comptroller of the Currency Michael Hsu.

In the OCC statement, Mr. Hsu called the final rule adopted by the OCC last year a "false start," emphasizing the need to rescind that rulemaking and facilitate an "orderly transition to a new rule." Mr. Hsu stated that the CRA needs to be strengthened through the joint efforts of the OCC, the Federal Reserve Board ("FRB") and the FDIC. In particular, he cited "disproportionate impacts of the pandemic on low and moderate income communities, the comments provided on the [FRB's] Advanced Notice of Proposed Rulemaking, and [the OCC's] experience with implementation of the 2020 rule" as reasons to start over in collaboration with the FRB and the FDIC.

In addition, Mr. Hsu said that any joint rulemaking to follow should build on the advance notice of proposed rulemaking ("ANPR") issued by the FRB in September 2020. In a separate statement, FRB Governor Lael Brainard expressed enthusiasm at building upon the ANPR, stating that it was intended to establish a "framework for a joint rulemaking that ensures the CRA remains a strong and effective tool to address inequities in access to credit."

In an interagency statement, the OCC, the FRB and the FDIC emphasized their commitment to jointly issue regulations that strengthen and modernize implementation of the CRA. The agencies noted that joint action will best achieve an effective framework that meets the credit needs of all communities in which banks do business, to include "low- and moderate-income neighborhoods."

Commentary

The announcement today that the OCC will propose to rescind its 2020 CRA rule is welcome news for much of the banking industry, which prefers consistency among the three agencies, and consumer advocates, who were opposed to what they saw as a weakening of the CRA in the OCC 2020 rule. With the Olympics about to begin, Acting Comptroller Hsu's reference to a false start may be apt, but to use another sports reference, working through a joint agency process may be the mulligan many were rooting for.

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