After months of speculation about modernizing the Community Reinvestment Act (CRA), the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp (FDIC) finally released their notice of proposed rulemaking for the regulation’s first overhaul in 25 years.
The 240-page document gives us our first look at how the two agencies propose changing CRA implementation, including:
- Clarifying and expanding what qualifies for CRA credit
- Creating additional definitions of “assessment areas”
- Expanding where CRA activity counts
- Providing an objective method for measuring CRA activity based on an institution’s size
- Revising data collection, record-keeping and reporting
What FIs Would Be Impacted by Potential Rule Changes?
FIs supervised by the OCC and FDIC could be impacted by the rules if and when they are finalized. About 85 percent of all CRA activity stems from the two agencies.
The Federal Reserve is still mulling over potential CRA changes and has not signed on to the proposal.
“Any modernization of the Community Reinvestment Act must further the goal at the heart of the statute — encouraging banks to meet the credit needs of local low- and moderate-income communities," the Federal Reserve said in a statement. "We look forward to studying the public comments on the rule proposed by the OCC and FDIC. At this time, no decisions have been made about how the Federal Reserve will proceed.”
NCUA-supervised institutions are still exempt from CRA requirements.
Should I Start Making Changes to My CRA Program?
No. This proposed rulemaking is the first step in a long journey to finalization. First the proposal will go through a 60-day comment period after it is published in the Federal Register, and there are a lot of opinions which may influence the final outcome. Then we’ll hear what the OCC and Fed come back with. There is no way of knowing what the final rule will ultimately look like.
While the financial services industry has generally applauded the proposal, some community groups and House Democrats have gone on the record saying that the changes don’t do enough to help low- and moderate-income communities.
What Should I Do While the Fed & OCC Move Forward?
The CRA rules you follow today will remain in effect for the foreseeable future. Examiners will continue to examine your institution to ensure they are being followed.
Make sure your institution has a good working CRA program and is regularly analyzing its CRA data to understand and manage CRA compliance risk.
What If I Want to Learn More About the Proposal?
If you’re curious to learn more about the proposal, American Banker breaks down the highlights here while the ABA Journal Podcast digs into details of the notice of proposed rulemaking with OCC Senior Deputy Comptroller Grovetta Gardineer.
As always, we will continue to monitor CRA modernization, bringing you the latest developments and sharing what you need to know.