OCC Releases Final Rule to Modernize CRA

On May 20, the Office of the Comptroller of the Currency (OCC) released a final rule to modernize the regulations implementing the Community Reinvestment Act (CRA). The OCC finalized the CRA rule without the support of the Federal Deposit Insurance Corporation (FDIC), despite publishing a joint notice for proposed rulemaking (NPR) to modernize the CRA together in January. FDIC Chairman Jelena McWilliams released a statement explaining that “the agency is not prepared to finalize the CRA proposal at this time.” Click here to access the final rule. Click here to access the OCC and the FDIC’s January 9 NPR.

The final rule implements changes to the CRA’s activity eligibility, assessment area definition, performance measurement, and reporting requirements. It establishes a new CRA evaluation measure that calculates the total dollar volume of a bank’s CRA-qualifying activities as a share of the bank’s domestic retail deposits. It also establishes a qualitative evaluation method that assesses a bank’s retail lending and community development (CD) activities. Regarding clarifying and expanding the set of activities eligible for CRA credit, the final rule explains that the OCC’s CRA illustrative list is a non-exclusive compilation of activities that were determined to meet/not to meet qualifying CRA activities. In other words, it is not a complete list of activities that meet the regulatory criteria, as this list does not and will not exist. In addition, under the final rule, banks serving as syndicators or sponsors of funds supporting Low-Income Housing Tax Credit (Housing Credit) or New Market Tax Credit (NMTC) projects will “receive credit for the total dollar value of the fund in the year it was originated.”

On April 8, Enterprise submitted comments on the joint NPR strongly urging the OCC and FDIC to delay even modest rulemaking on CRA to allow banks and community stakeholders to thoughtfully plan and respond to the Covid-19 pandemic. Enterprise’s comments expressed concern about adopting an oversimplified, quantitative evaluation method and expanding the list of qualifying activities for CD that would allow for banks to meet their obligations with much lower-impact investments. Other housing and community development advocates have expressed similar concerns, including Sen. Sherrod Brown (D-OH), who released a statement criticizing the OCC’s decision to implement these changes during the pandemic. The National Housing Conference (NHC) also released a statement criticizing the release of the final rule “amid the worst health and economic crisis of our lifetimes.” For more information on the final CRA rule, stay tuned to the Enterprise blog

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