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Trump administration considering changes to Community Reinvestment Act

OCC invites comments on how to “modernize” CRA regulations

The Trump administration is considering making changes to the Community Reinvestment Act, the federal law that requires banks to meet the credit needs of all communities they serve, including low- and moderate-income neighborhoods.

The Office of the Comptroller of the Currency announced Tuesday that it is looking to “modernize” the CRA and wants public comments on how best to do so.

“The OCC seeks stakeholder comment on ways to modernize the regulations that implement the CRA, in order to better achieve the statute’s original purpose, increase lending and investment where it is needed most, and reduce the burden associated with reporting and assessing CRA performance,” the OCC said in a statement.

The potential reduction in the “burden” of CRA reporting falls right in line with what Joseph Otting said when he took over as Comptroller of the Currency back in November 2017.

Otting, who served as CEO of OneWest Bank from 2010 through 2015, bills himself as a “career banker” and previously pledged to reduce the regulatory “burden” that banks currently face.

Prior to joining OneWest, Otting worked for U.S. Bank from 2001 and 2010. During that time, Otting served in various roles, including Oregon Market President, Executive Vice President, and East Region Commercial Banking Group Manager.

Otting then joined OneWest in 2010, working closely with the bank’s chairman, Steven Mnuchin, who is now Secretary of the Department of the Treasury. Otting was let go by OneWest when the bank merged with the CIT Group in 2015.

When Otting took over at OCC, he said that effective regulation needs to evolve with the “changing needs of the nation” and ensure that all parties involved are being well served.

And now, Otting’s OCC is signaling that changes could be coming to the CRA.

“As a long-time banker, I have seen firsthand the benefit of CRA investment and how it makes communities vibrant. I applaud the effort of community development practitioners and bankers who work together to make an important difference in our nation’s neighborhoods,” Otting said in a statement.

“I have also seen how limitations in the current CRA regulation can fail to provide consideration to a bank that wants to lend and invest in a community with a need for capital, including many low- and moderate-income areas,” Otting continued.

“Unfortunately, the operation of the current CRA regulation can result in restricted resources,” Otting added. “It is time for a national discussion on how we can make the CRA work better.”

To accomplish these goals, the OCC is putting out an “Advanced Notice of Proposed Rulemaking” that seeks public comment on a number of potential “improvements” to the CRA in the following areas:

  • Increasing lending and services to people and in areas that need it most, including in LMI areas
  • Clarifying and expanding the types of activities eligible for CRA consideration
  • Revisiting how assessment areas are defined and used
  • Establishing metric-based thresholds for CRA ratings
  • Making bank CRA performance more transparent
  • Improving the timeliness of regulatory decisions related to CRA
  • Reducing the cost and burden related to evaluating performance under the CRA

“Stakeholders of all kinds have spoken up, calling the current regulatory framework for the CRA outdated, complex, and cumbersome,” Otting said. “Many have complained of the difficulty of getting capital to critical areas, significant administrative burden, lack of CRA consideration for important development activities, and failure to adapt to advances in banking such as interstate branching and digitization of services.”

Comments on the proposal will be accepted for 75 days after the proposal is published in the Federal Register.

To read the OCC’s full proposal and request for comment, click here.

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