Bank Regulation

OCC Starts Process To Rewrite The Community Reinvestment Act

The Office of the Comptroller of the Currency is aiming to rewrite the 1977 Community Reinvestment Act, which is designed to encourage bank lending in low-income areas.

Reuters, citing the OCC, reported the government agency is seeking public comment in what would be the first step to overhaul the law, which banks have contended needed an overhaul since the 1990s when it was last updated. Under the rules, banks have to provide mortgages and credit products to low-income communities in which they accept deposits. Banks are graded on their compliance by the government. Those that fail to get a passing grade can be limited in how they expand via mergers and acquisitions and opening new branches until they meet the requirements of the rule. But the banks argue the rules don’t take into account technology consumers are using to apply for loans regardless of where they live. The Trump Administration, noted Reuters, has been pushing for the rules to be relaxed on that front.

Overseeing the Community Reinvestment Act is the shared responsibility of the OCC, Federal Deposit Insurance Corp., and Federal Reserve. The FDIC and FCC did not back the comments on the part of the OCC, although both have shown an interest in rewriting the rules. The OCC has a 75 day comment period and will then share the responses with the other two regulators, noted the report.  “Stakeholders of all kinds have spoken up, calling the current regulatory framework for the CRA outdated, complex, and cumbersome,” Comptroller Joseph Otting said in a statement to Reuters. The OCC, noted the report, is looking at expanding the types of activity that would count under the rules and widening the areas that banks can operate in and still be in compliance with the rule. “Current CRA rules make it harder for [community bankers] to serve their communities, which makes today’s OCC action both timely and necessary,” Rob Nichols, president of the American Bankers Association, said in a statement to Reuters. “The current framework is holding back investment in communities the law is intended to serve, while failing to account for significant innovations in the banking sector, including the opportunities presented by mobile technologies.”




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