The Office of the Comptroller of the Currency (OCC) released yesterday an Advance Notice of Proposed Rulemaking (ANPR) soliciting public input on how it could best amend its Community Reinvestment Act (CRA) regulations. OCC intends to modernize its CRA regulations to better reflect current banking industry dynamics and allow banks to better assist the communities they serve.
The ANPR follows a memorandum the U.S. Treasury Department released in April to federal banking regulators — OCC, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve — recommending changes to their CRA regulations. The memorandum is the culmination of a review Treasury began in July 2017 to assess how the CRA could be modernized to reflect developments in the banking industry and allow banks to better assist the communities they serve. NCSHA previously summarized the Treasury memorandum on its blog.
OCC lays out 31 specific questions in the ANPR asking about possible changes to its CRA regulations. The questions involve several key subjects, including how the CRA regulations can be adjusted to ensure that banks provide more assistance to consumers and communities most in need; possible clarifications and expansions to the type of activities eligible for CRA credit; potential changes to banks’ CRA assessment areas; and making banks’ CRA performance more transparent.
With regard to CRA assessment areas, OCC notes that most banks’ assessment areas are limited to those communities in which the bank has a physical presence (main office, branches, and automated teller machines) and surrounding communities in which the bank has originated or purchased a substantial portion of loans. Because of the proliferation of interstate banks and increasing use of electronic banking, this approach may exclude many of the communities banks are actually serving. OCC asks how the definition of assessment area should be updated to accommodate these new developments.
OCC poses a number of questions on what activities should be eligible for CRA credit; specifically, the types of economic and community development activities that should be eligible. The agency asks if banks should be able to receive CRA credit only for certain community development activities that serve disadvantaged populations. It also asks if certain activities that might otherwise be considered community development investments should not be eligible for CRA, or only eligible for partial credit. OCC cites as an example of such activity the purchase of mortgage-backed securities. It is unclear if OCC is including tax-exempt Housing Bonds when it refers to mortgage-backed securities.
While OCC issued the ANPR independently of FDIC and the Federal Reserve, all three agencies have indicated they are exploring possible changes to their CRA regulations and hope to work together on a common set of reforms. If OCC were to advance changes on its own, these would apply only to banks OCC regulates. OCC currently regulates just over 20 percent of the nation’s banks, though those banks combined have more total assets than those regulated by either FDIC or the Federal Reserve.
The deadline to submit responses to the ANPR will be 75 days after it is published in the Federal Register, which is expected to be shortly. NCSHA will be submitting a reply on behalf of all state HFAs and expects to weigh in several times during the rulemaking process. If you have questions or input you would like NCSHA to consider, please email Greg Zagorski.