OCC and FDIC Release Proposed Rule on CRA Modernization

Today the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a Joint Notice of Proposed Rulemaking on Community Reinvestment Act (CRA) Modernization. The OCC and FDIC will be seeking feedback during a 60-day comment period when it is officially posted in the Federal Register, likely in the next week.

The AHTCC is beginning work immediately to analyze the potential impact of this 239-page proposed rule on affordable housing and develop our response. We are especially focused on two areas that stand to have a significant impact on affordable housing: (1) The shift to a single ratio for determining a bank’s CRA rating, which also provides a new method for determining a minimum threshold for community development lending and investments, and (2) The broadening of CRA assessment areas to include areas in which banks collect significant deposits, in addition to where they have physical branches.

Our top priority is that any changes to CRA allow us to continue producing at least as much affordable housing as we do today. In our comment letter from November 2018 responding to the OCC’s Advance Notice of Proposed Rulemaking, we encouraged the OCC to retain a separate investment test to ensure that financial institutions continue to have an incentive to make investments in impactful products like the Housing Credit, to expand CRA assessment areas beyond the current outdated physical footprints, to ensure that any expansion of CRA-eligible activities does not discourage investment in the Housing Credit, and to allow for more timely and transparent examinations. The AHTCC has also participated in several stakeholder events with the OCC during which we reinforced the importance of these recommendations for sustaining affordable housing investment, and will continue to engage throughout this process.

The Federal Reserve, which is the third agency that oversees CRA, did not join the OCC and FDIC in this proposal, a notable departure that suggests significant differences in its approach. In September, the AHTCC and 27 community development stakeholders signed a letter urging regulators to act cooperatively and thoughtfully as they look to modernize CRA. The Federal Reserve is expected to announce its own steps towards CRA modernization soon.

For more information, see the OCC’s Summary of the Proposal and CRA Fact Sheet.