OCC to Reconsider Final Rule to "Strengthen and Modernize" Community Reinvestment Act Regulations

Daniel Meade Commentary by Daniel Meade

The OCC will reconsider a June 2020 final rule amending the Community Reinvestment Act ("CRA"). The CRA obligates regulated financial institutions "to help meet the credit needs of the local communities in which they are chartered."

As previously described, the June 2020 rule was designed to: (i) expand and make clearer "qualifying activities," (including bank lending and investing); (ii) revise the delineation of "assessment areas"; (iii) provide more "consistent and objective" methods for assessing CRA performance; and (iv) mandate "timely and transparent" reporting.

The OCC explained that the additional time it will take to reconsider the June 2020 rule will (i) enable banks to more flexibly deploy their resources for COVID-19 pandemic-related purposes, (ii) allow the OCC to consider additional input from stakeholders, (iii) provide the OCC with more time to assess issues and questions that have been raised with regard to the rule's implications, and (iv) enable the OCC to reevaluate the necessary data and take further regulatory action, as needed.

The OCC stated that it will not object to firms suspending efforts undertaken to comply with the January 1, 2023 or January 1, 2024 compliance dates. In addition, the OCC said that it does not intend to finalize a December 2020 proposed rule that sought feedback on a method for determining the CRA evaluation measure benchmarks, and to test the thresholds for retail lending distribution and the community development minimums as they pertain to the June 2020 rule.

The OCC clarified that it will not implement or rely on the June 2020 rule's evaluation criteria as it pertains to:

  • quantification or qualifying activities under OCC Rules 25.07 ("Qualifying activities quantification") and 25.08 ("Qualifying activities value");

  • assessment areas under OCC Rule 25.09 ("Assessment area");

  • general performance standards under OCC Rules 25.10 ("Performance standards and ratings, in general"), 25.11 ("CRA evaluation measure"), 25.12 ("Retail lending distribution tests"), and 25.13 ("General performance standards and presumptive rating");

  • data collection under OCC Rule 25.21 ("Data collection for banks evaluated under the general performance standards in § 25.13 or a strategic plan under § 25.18");

  • recordkeeping under OCC Rule 25.25 ("Recordkeeping"); and

  • reporting under OCC Rule 25.26 ("Reporting for banks evaluated under the general performance standards in § 25.13, the wholesale and limited purpose bank performance standards in § 25.15, or a strategic plan under § 25.18").

Additionally, the OCC stated that it will continue to implement the June 2020 rule's provisions that required compliance by October 1, 2020. These are described more fully in OCC Bulletin 2020-99 and include, among other things, providing information on "bank type determinations, lists of distressed and underserved areas and the median hourly compensation value for community development service activities," and training.

Commentary

Daniel Meade

This action by the OCC to reconsider the 2020 final rule may be one of the few actions Acting Comptroller Hsu may be able to take that all sides view as good news. The industry had requested at least a delay in implementation of the OCC's 2020 rule as the Federal Reserve Board and the FDIC worked on updating their versions of CRA rules, and had concerns that any efforts at implementation might be for naught if the rules changed among interagency efforts. Critics of the 2020 rule are happy that, at least for now, it won't be fully implemented.

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