OCC Updates CRA Policies and Procedures Manual

The OCC yesterday updated its policies and procedures manual to clarify its policy and methodology for determining how evidence of discrimination or illegal credit practices will affect a bank’s Community Reinvestment Act rating. The updated version replaces a previous edition of the manual issued in October 2017.

Importantly, the updated manual maintains the OCC’s position that there be a logical nexus between the CRA rating and evidence of discriminatory or illegal credit practices. The revisions clarify that in assigning a CRA rating, the OCC first evaluates a bank’s CRA performance for the applicable time period and then makes any adjustments that are warranted based on evidence of discriminatory or other illegal credit practices. The OCC also clarified that its general policy is to downgrade the rating by only one rating level unless such illegal practices are found to be particularly egregious.

The OCC reiterated that its policy is “generally not to penalize a bank by lowering its CRA rating when examiners have determined the bank has taken appropriate remedial actions because penalties in such cases can unnecessarily distract and divert the bank’s resources from lending, investing, or serving the relevant communities and thereby frustrate the CRA’s purposes.”