FDIC and OCC Issue Proposed Rule Updating Community Reinvestment Act Regulations | Practical Law

FDIC and OCC Issue Proposed Rule Updating Community Reinvestment Act Regulations | Practical Law

The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued a joint proposal seeking to modernize their Community Reinvestment Act implementing regulations.

FDIC and OCC Issue Proposed Rule Updating Community Reinvestment Act Regulations

Practical Law Legal Update w-023-5330 (Approx. 3 pages)

FDIC and OCC Issue Proposed Rule Updating Community Reinvestment Act Regulations

by Practical Law Finance
Published on 09 Jan 2020USA (National/Federal)
The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued a joint proposal seeking to modernize their Community Reinvestment Act implementing regulations.
On December 12, 2019, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued a joint proposal (Proposed Rule) seeking to modernize their Community Reinvestment Act (CRA) implementing regulations. The CRA was enacted in 1977 to encourage insured depository institutions to help meet credit needs in local communities (see Practice Note, Community Reinvestment Act Requirements for Banks). The CRA has not been updated in almost 25 years. The Proposed Rule is intended to:
  • Make the administration of the CRA more objective, predictable, and consistent.
  • Account for technology changes in the business of banking.
Specifically, the Proposed Rule would:
  • Clarify and expand which activities qualify for credit under the CRA.
  • Expand the geographic area where CRA activity counts by creating additional assessment areas linked to where an institution's deposits originate.
  • Provide a more objective method to measure CRA activity by establishing activity thresholds as a percentage of domestic deposits.
  • Revise data collection, recordkeeping, and reporting requirements.
It is notable that the Federal Reserve Board, which also has implementing CRA regulations, did not participate in this joint rulemaking. The Proposed Rule has already generated a significant amount of public criticism. For example, some critics argue that the Proposed Rule relies too much on a general performance metric that measures activity thresholds as a percentage of retail domestic deposits.
Comments will be accepted for 60 days after publication of the Proposed Rule in the Federal Register.