On Tuesday, May 18, 2021, the Office of the Comptroller of the Currency (“OCC”) announced that it will reconsider its June 5, 2020 final rule (“final rule”) overhauling its regulations implementing the Community Reinvestment Act (the “CRA”). The final rule, which applies only to national banks, federal savings associations, and insured federal branches (“OCC-regulated banks”), made the first major revisions to CRA regulations in nearly twenty-five years and would have established new general performance standards based on more quantitative measures of CRA performance than the tests set forth in existing CRA regulations. Our client alert summarizes key aspects of the final rule.
In connection with this announcement, the OCC also stated it will not object to OCC-regulated banks opting not to prepare for the provisions of the final rule that have a compliance date of January 1, 2023, or January 1, 2024. Additionally, the agency will not implement or rely on the evaluation criteria in the final rule relating to (i) quantification of qualifying activities, (ii) assessment areas, (iii) general performance standards, (iv) data collection, (v) recordkeeping, and (vi) reporting.
Moreover, the OCC announced that it does not intend to finalize the December 4, 2020 notice of proposed rulemaking requesting comment on the evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the final rule’s general performance standards. The OCC also discontinued its December 15, 2020 notice and request for comment seeking bank-specific CRA data, which the OCC would have used to determine these metrics under the final rule.
The OCC will continue to implement the provisions that had a compliance date of October 1, 2020. For example, the agency will continue to publish lists of distressed and underserved areas based on the final rule definitions and provide bank type determinations based on the final rule’s asset thresholds. In addition, the agency will accept requests for confirmation of activities qualifying for CRA credit under the final rule.
The OCC’s determination to reconsider the final rule comes as Michael Hsu steps in as Acting Comptroller of the Currency (see our blog post on this appointment). In his opening statement before a House Committee on Financial Services hearing on May 19, 2021, Acting Comptroller Hsu identified three specific concerns with the final rule: (i) circumstances have changed as a result of the COVID-19 pandemic, and the agencies should consider amending CRA regulations in light of the disproportionate impact of the pandemic on vulnerable groups; (ii) the public has provided valuable feedback in response to the Federal Reserve’s September 2020 advance notice of proposed rulemaking on CRA reform (which we summarized in a client alert); and (iii) the OCC has learned lessons through its partial implementation of the final rule.
Based on the outcome of the OCC’s review, Acting Comptroller Hsu stated that “all options are under consideration” – including rescinding or revising the final rule, and working with the other banking agencies on a joint CRA reform proposal.