There has been recent activity on the proposed Community Reinvestment Act (CRA) regulations, but it is not clear whether the process is moving in a positive direction or not.
Brainard Explains FRB Position
The Federal Reserve Board (FRB) decided not to join the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Company (FDIC) in issuing the proposed revisions to the CRA regulations. On January 8, 2020 FRB Governor Lael Brainard spoke at the Urban Institute on “Strengthening the Community Reinvestment Act by Staying True to Its Core Purpose.” While some of her comments do disparage the proposal of the OCC and FDIC to amend their CRA regulations, Brainard described the Federal Reserve Board’s approach to measuring CRA performance, indicating that the Board of Governors hopes to inform the public comment process with a goal of arriving at a uniform approach that will allow for an interagency final rule. The FRB approach:
- Ensures that expectations are tailored for banks of different sizes and business models.
- Provides greater scope to calibrate the evaluation metrics to the opportunities available in the market, which can differ for retail lending and community development financing.
OCC/FDIC Publish Proposal Rule
The OCC and FDIC approved their proposed rule to amend CRA on December 12, 2019, but did not publish the final rule in the Fed Register until January 9, 2020. The delay is reportedly due to the holidays. Comments on the FDIC/OCC proposed amendments are due by March 9, 2020.
OCC/FDIC Request CRA Information
On January 10, the OCC published a Request for Information seeking bank-specific data and information to supplement currently available data and to inform potential revisions to modernize and strengthen the CRA regulatory framework. Responses to this request for information will be accepted through March 10, 2020.
[Editor’s comments: We agree that every bank should perform a self-evaluation now, using the process laid out in the proposal, to determine the impact on their CRA rating. We have walked through the process with a few banks and one of those banks was shocked at the resulting rating.
Compliance Resource is conducting a two-hour webinar entitled CRA Proposal – Understanding the Impact on January 24, 2020 from 2:00 to 4:00 p.m. EST. The program explains the OCC/FDIC proposal, the FRB’s position, and demonstrates how to calculate the proposed ratings. For more information and registration visit our website.]