On May 5, 2022, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve Board), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) issued a joint notice of proposed rulemaking to strengthen and modernize the Community Reinvestment Act (CRA) regulatory framework. The proposed rule is intended to: update CRA regulations to strengthen the achievement of the statute’s purpose; adapt to changes in the banking industry, including the expanded role of mobile and online banking; provide greater clarity and consistency in the application of the regulations; tailor performance standards to account for differences in bank size and business models and local conditions; tailor data collection and reporting requirements and use existing data whenever possible; promote transparency and public engagement; confirm that CRA and fair lending responsibilities are mutually reinforcing; and create a consistent regulatory approach that applies to banks regulated by all three agencies.
The OCC encourages stakeholders to review the proposed rule and provide comments on or before the close of the comment period on August 5, 2022.
Note for Community Banks
This bulletin applies to all banks1 subject to the CRA.
The proposed rule would, if finalized,
- create an updated CRA evaluation framework with tailored performance standards that are applied based on bank asset sizes (small, intermediate, and large banks) and business models (wholesale and limited purpose banks). Under the proposed rule, small banks have assets under $600 million, intermediate banks have assets of at least $600 million and less than $2 billion, and large banks have assets of at least $2 billion.
- apply four new performance tests to evaluate large banks’ CRA performance: the Retail Lending Test, Retail Services and Products Test, Community Development Financing Test, and Community Development Services Test.
- evaluate small banks under the current CRA performance standards2 unless a small bank opts into the new Retail Lending Test.
- evaluate intermediate banks under the new Retail Lending Test, and either the current community development (CD) test or, at an intermediate bank’s election, under the new Community Development Financing Test.
- evaluate wholesale and limited purpose banks under their own Community Development Financing Test.
- establish new criteria for CD activities, establish a CD activity confirmation process for banks subject to the CRA regulation, and provide for the agencies to create and maintain a publicly available illustrative list of CD activities.
- set forth updated requirements for the delineation of assessment areas, including facility-based assessment areas for all banks and new retail lending assessment areas for large banks.
- retain a bank’s ability to be evaluated under a strategic plan, with modifications to reflect the new performance standards, subject to a public participation process and agency approval.
- create updated record-keeping, data collection, reporting, and disclosure requirements for large banks and tailor those requirements based on two categories of large banks based on asset size.
- continue public file and public notice disclosure requirements and create a new public comment process to facilitate public engagement.
- provide transition provisions under which any new compliance dates would be phased in over a two-year period following publication in the Federal Register.
On July 20, 2021, the OCC announced that it would propose to rescind its CRA rule published in June 2020 and work with the Federal Reserve Board and FDIC to put forward a joint rulemaking that strengthens and modernizes the CRA. On December 14, 2021, the OCC issued a final rule that rescinded the June 2020 rule and replaced it with a rule based largely on the agencies’ 1995 CRA rules (as amended). This action realigned the OCC’s CRA rule with those of the Federal Reserve Board and FDIC. The interagency proposed rule would, if finalized, replace the current CRA rules in effect for all agencies.
Please contact Heidi Thomas, Special Counsel, Chief Counsel’s Office, at (202) 649-5490; or Vonda Eanes, Director for CRA and Fair Lending Policy, or Karen Bellesi, Director for Community Development, Bank Supervision Policy, at (202) 649-5470.
Further information about the notice of proposed rulemaking, including information about an agency webinar on the proposed rule, is available at Community Reinvestment Act (CRA) | OCC.
Benjamin W. McDonough
Senior Deputy Comptroller and Chief Counsel