OCC, FDIC Propose New Regulatory Framework for CRA

The OCC and the FDIC today proposed major changes to the regulations implementing the Community Reinvestment Act. The proposal would clarify which activities count for CRA credit, update where CRA performance is assessed, revise how CRA performance is measured and make CRA data reporting more transparent. Banks with less than $500 million in assets would be able to choose to remain under the current CRA framework.

Specifically, the proposal would require regulators to publish a non-exhaustive list of pre-approved CRA activities—and to create a process by which stakeholders can recommend new items to include. The proposal would reflect present-day practices in mobile and online banking by expanding assessment areas. In addition to using geographies based on bank facilities, the agencies would also assess performance in areas where banks conduct a substantial volume of retail lending and deposit-taking.

The proposal would introduce two performance standards to evaluate banks’ CRA performance—measuring both the share of retail lending to low-to-moderate-income individuals and areas, as well as the impact of that activity. Together, this “presumptive rating” could be adjusted by examiners based on performance context and other factors. Banks would report CRA data annually, and the agencies said that the data-based evaluation method would reduce the lag time in preparing CRA exam reports.

While ABA staff are still reviewing the details of the 239-page proposal, American Bankers Association President and CEO Rob Nichols welcomed the agencies’ action to move forward. “We believe that updating these rules to reflect the reality of financial services today can enhance banks’ ability to invest in their communities and achieve the laudable goals of CRA,” he said. “Working with our members, we’ll analyze these metrics closely to gauge their likely impact and effectiveness.”

Although the Federal Reserve did not join the proposal, Nichols said that ABA continues to support a final interagency rule that includes the Fed, “which would provide a consistent regulatory framework for all banks.”

Comments on the proposal will be due 60 days after it is published in the Federal Register. ABA encourages all banks to comment, and will host a free, members-only webinar on Dec. 19 to provide more information on the proposal and information about commenting. The association will release more resources on the proposal in the days to come.