Otting, McWilliams Discuss Next Steps on CRA Modernization Effort

Comptroller of the Currency Joseph Otting is moving forward with issuing a long-awaited notice of proposed rulemaking that would modernize how the agency evaluates banks’ Community Reinvestment Act performance, he said today. Otting said he expects to issue the NPR by the end of 2019 with a 60-day comment period and hopes to have the final rule issued by April or May of 2020.

Speaking at a Clearing House/Bank Policy Institute conference in New York, Otting added that he was “very optimistic” the NPR would be issued jointly with the FDIC, although he confirmed to reporters on the sidelines that the Federal Reserve would not join the NPR. Speaking with reporters separately, FDIC Chairman Jelena McWilliams said that she is “more inclined to join him than not join him,” adding that she will decide within next week.

Asked whether the Fed might jointly issue a final rule, Otting was uncertain. “Between the OCC and the FDIC, we cover 85% of the CRA,” Otting added. “If nothing else, it’ll be a good chance for the industry to see what it’s like to operate under a new rule.” However, McWilliams emphasized the importance of having a final CRA rule issued on an interagency basis. “You always want to have three regulators going together,” she said. “You don’t want to create policies where the regulators are not going together and you don’t have the same rules for all of our banks.”

Otting previewed a few elements expected to be in the NPR, including a one-to-two-year phase-in period to help banks get used to the planned metric. “We’ll let banks end their current exams under the current format unless they want to change,” he said. He added that the NPR would increase the upper limit for a CRA-qualifying small business loan from $1 million to $2 million.

As he has done previously, Otting discussed broad outlines of what the agency will propose, including a clear list of qualifying activities, broadening of assessment areas and a metric for CRA compliance. He added that the OCC would like to publicize CRA data so that communities have better visibility into the $480 billion in loans and investments each year that benefit low-to-moderate-income individuals.

This story has been updated.