On August 28, 2018, the Office of the Comptroller of the Currency (“OCC”) released an advanced notice of proposed rulemaking (“ANPR”) inviting comments on a revised Community Reinvestment Act (“CRA”) framework. In the ANPR, the OCC described its vision for a new CRA framework that would:
- encourage more lending and investment activity in low and moderate income communities;
- provide more consistency across CRA evaluations and ratings; and
- promote clarity regarding CRA-qualifying activities.
The ANPR requests responses to 31 questions across several topic areas, including the current CRA regulatory approach; a modernized CRA regulatory approach; CRA-qualifying activities; and recordkeeping and reporting.
In introducing its questions about a modernized approach, the OCC describes a “metric-based framework” that would:
- use quantitative benchmarks that correspond to specific ratings and clear standards for quantifying CRA activities, increasing transparency for CRA performance;
- redefine the meaning of a “community” more broadly to include additional domestic geographies where the bank engages in business; and
- expand the types of activities considered in a CRA evaluation, focusing on lending, services, and investments in low to moderate income geographies and individuals and other geographies and populations in need of financial services.
The metric-based framework might allow banks to calculate ratios by comparing certain objective criteria, such as capital or assets, to the dollar value of CRA-qualifying activity. Banks could then compare these ratios to benchmarks for each rating category. The ANPR also requests comment regarding whether certain CRA-qualifying activity (e.g., CD equity investments) should be weighted more heavily under these ratios.
The ANPR follows the Department of the Treasury’s (“Treasury’s”) recommendations, released in April 2018, to reform the CRA framework. We discussed Treasury’s recommendations in a separate blog post. As expected, there is considerable overlap between the themes in Treasury’s recommendations and the OCC’s ANPR, although the OCC’s ANPR does not set forth a comprehensive approach to revising the CRA framework. The OCC also did not release the ANPR jointly with the Board of Governors of the Federal Reserve (“Federal Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”). POLITICO reported that, during a press conference, Otting said, “It is my hope we can do this jointly,” but left open the door for the OCC to proceed alone, adding that “[w]e’ll cross the bridge at that particular time.”
Comments are due 75 days after the ANPR is published in the Federal Register.