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The FDIC and Office of the Comptroller of the Currency have changed course and extended the public comment period for proposed changes to the Community Reinvestment Act (CRA). Comments will be accepted until April 8.
The FDIC and OCC said in a joint statement that they “have determined that a 30-day extension of the comment period is appropriate.”
The regulators had released the proposed changes in more than 200 pages of proposed rule changes on Dec. 12, setting the comment period for 60 days following publication in the Federal Register. The proposal appeared in the Federal Register on Jan. 9, with comments due March 9.
Waters: Changes Being Pushed Through
Several organizations, including bank associations and housing advocates, submitted comments asking to have the comment period extended.
Comptroller of the Currency Joseph Otting said in an appearance before the House Financial Services Committee on Jan. 29 that the OCC would not extend the comment period.
At the same hearing, Committee Chairwoman Maxine Waters, D-California, said changes to the CRA demanded a heightened level of public scrutiny and called the 60-day comment period unacceptable. She said Otting appeared determined to push the changes through as quickly as possible.
“Before the proposal was released, all 34 Democrats on this committee wrote to Comptroller Otting and the other bank regulators calling on them, at a minimum, to provide a public comment period of at least 120 days for any proposal reforming the CRA,” Waters said, according to a statement with her remarks. “Since that time, community banks and others have also asked for a 120-day comment period. In the past, the OCC has provided 120 days if not longer for the public to comment on bank capital rules, and there’s no reason why this important CRA rulemaking should be treated differently.”
Concerns Raised over Impacts
Adopted in 1977, the CRA has not been revamped in 25 years. The regulations encourage financial institutions to meet community credit needs, including in low- and moderate-income neighborhoods, and prevent discrimination through redlining.
The FDIC and OCC, which conduct approximately 85 percent of CRA assessments, said in the joint statement that “the proposed regulations are intended to increase bank activity in low- and moderate-income communities where there is significant need for credit, more responsible lending, and greater access to banking services.”
“The proposal would clarify what qualifies for credit under the CRA, enabling banks and their partners to better implement reinvestment and other activities that can benefit communities,” the regulators said. “The agencies will also create an additional definition of ‘assessment areas’ tied to where deposits are located – ensuring that banks provide loans and other services to low- and moderate-income persons in those areas.”
Housing advocates have expressed concerns that the changes could reduce investment in lower-income communities, noting that the proposed regulations call for assessing banks based on the amount of money being lent rather than the number of loans or their impact.
The other bank regulator, the Federal Reserve, has not signed on to the proposal. In a Jan. 8 speech, Fed Governor Lael Brainard said metrics should “rely on loan counts rather than dollar value in order to avoid inadvertent biases in favor of fewer, higher-dollar value loans.”
Brainard also suggested CRA revisions should not be rushed.
“If the past is any guide, major updates to the CRA regulations happen once every few decades. So, it is much more important to get reform right than to do it quickly,” Brainard said, according to a transcript of her speech. “If we only have one opportunity for a few decades, I want to make sure CRA reform is based on the best analysis and ideas and the broadest input available.”
