During an often contentious hearing before the House Financial Services Committee today, Comptroller of the Currency Joseph Otting defended his agency’s proposed changes to the Community Reinvestment Act regulations. Otting emphasized that the proposal is aimed at clarifying which activities count for CRA credit, updating where CRA performance is assessed, revising how CRA performance is measured and making CRA data reporting more transparent.
“If we’re proficient at our goal, a bank will be able to know every 90 days whether they’re in compliance with CRA,” Otting said, emphasizing the important role of objectivity and transparency in the proposed assessment framework.
The comptroller pushed back against a number of common misconceptions about the proposal, including that the proposal would permit redlining and that it employs the use of a single metric to determine a bank’s CRA rating. “There is no one ratio in this proposal. That is a myth—that is inaccurate,” Otting said. He added that under the proposal, examiners would be required to ”use a retail lending [distribution]test for each major type of product,” identical to what Federal Reserve Governor Lael Brainard called for in a recent speech.
Noting that the agency has actively sought input from industry and community industry stakeholders throughout the rulemaking process, Otting confirmed that the OCC would not extend the 60-day comment period on the proposal, and he would seek to finalize the rule within 60 to 75 days once the comment window closes. He emphasized, however, that “there will be a lot of outreach” as comments are reviewed.
Ahead of the hearing, the Republican members of the Financial Services Committee wrote to Otting and FDIC Chairman Jelena McWilliams expressing support for the agencies’ joint proposal, noting that the current rules—which have not been updated since the mid-1990s—do not reflect the modern banking system.
“The proposal aims to increase investment and lending opportunities in the distressed communities that the underlying statute intends to empower,” the lawmakers wrote. “We applaud the NPR’s commitment to establishing clear and transparent guidelines for CRA compliance, a much-needed change that will help banking institutions better serve their communities.”