On May 20, 2020 the Office of the Comptroller of the Currency (OCC) issued a final rule on regulations governing the Community Reinvestment Act (CRA). This rule comes just six weeks after more than 7,500 comment letters were submitted in response to the agency’s proposed changes to CRA – including a letter of opposition from the Low Income Investment Fund (LIIF).
LIIF CEO Daniel A. Nissenbaum issued the following statement in response to the OCC’s final rule:
“LIIF remains concerned that the OCC’s changes to CRA regulations will have negative implications for community development efforts undertaken in some of the nation’s most vulnerable communities. Despite signaling a desire to increase investment levels in underserved communities, the changes instead threaten to dilute the law’s emphasis on impactful community development activities – including the affordable housing, child care centers, grocery options, schools and other community facilities that are critical to the fabric of healthy, thriving communities.
The OCC’s changes are concerning in any circumstance but will be felt even more acutely as communities across the country work tirelessly to respond to the worst economic crisis since the Great Depression. Financial institutions are also working to adapt to changing economic conditions and require flexibility to identify the shifting needs of local communities. The predominantly quantitative evaluation approach in the OCC’s rule does not sufficiently allow for these important nuances of community reinvestment.
Although the final rule will present new obstacles for the community development industry, LIIF is heartened to know that many of our banking partners remain committed to impactful community development efforts in difficult-to-reach communities. We will push forward in our pursuit of advancing equitable communities of opportunity and will remain engaged with the federal banking regulators, our partners and other stakeholders to work towards a robust and effective CRA regulatory regime for the future.”
Notably, the Federal Deposit Insurance Corporation (FDIC) did not join the OCC in issuing a final rule despite signing on to the proposed changes. The Federal Reserve has signaled their differences throughout the process by not joining their counterparts on the proposed changes. The OCC’s final rule is a departure from the typically joint CRA rulemaking process undertaken by the three federal banking regulators.
Larger banks will have until Jan. 1, 2023 to comply with the new rules, while smaller banks will have until Jan. 1, 2024 to comply. Banks regulated by the Federal Reserve and FDIC will continue to be subject to current CRA rules.