On August 28, 2018, the Office of the Comptroller of the Currency (OCC) issued an advance notice of proposed rulemaking (ANPR) inviting public comment on ways to modernize the regulations that implement the Community Reinvestment Act (CRA). In their notice (OCC-2018-0008), the OCC is soliciting ideas on how the CRA rules could better achieve the statute’s original purpose, encourage increased lending and investment where it is needed the most, and reduce the burden associated with reporting and evaluating CRA performance.
As the OCC plans to share the results of the ANPR with other regulatory agencies, all financial institutions are encouraged to provide comments to the OCC.
When submitting a comment, commenters must include “OCC” as the agency name and “Docket ID OCC-2018-0008” in each comment. Confidential or information inappropriate for public disclosure should not be included in comments as they will generally be made public.
There are four methods for submitting comments.
Federal eRulemaking Portal at Regluations.gov. To submit this way, commenters should go to www.regulations.gov. Enter “Docket ID OCC-2018-0008” in the Search box and click “Search.” Click on “Comment Now” to submit public comments. Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments.
E-mail. E-mailed comments can be sent to email@example.com.
Mail. Comments can be sent by mail to the following: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-218, Washington, DC 20219.
Fax. Yes, fax machines are still used by government agencies. Therefore, comments can be submitted by fax to (571) 465-4326.
Comments are due on or before 75 days after publication in the Federal Register.
Questions for Comment
The OCC has provided a number of specific questions for which they have requested comments:
- Are the current CRA regulations clear and easy to understand?
- Are the current CRA regulations applied consistently?
- Is the current CRA rating system objective, fair, and transparent?
- Two goals of the CRA are to help banks effectively serve the convenience and needs of their entire communities and to encourage banks to lend, invest, and provide services to LMI neighborhoods. Does the current regulatory framework support these goals in light of how banks and consumers now engage in the business of banking?
- With the statutory purpose of the CRA in mind, what aspects of the current regulatory framework are most successful in achieving that purpose?
- If the current regulatory framework is changed, what features and aspects of the current framework should be retained?
- How could an alternative method for evaluating CRA performance be applied, taking into account the following factors: bank business model, asset size, delivery channels, and branch structure; measures or criteria used to evaluate performance, including appropriate metrics; and consideration for qualifying activities that serve areas outside a bank’s delineated assessment areas?
- How could appropriate benchmarks for CRA ratings be established under a metric-based framework approach, taking into account balance-sheet items, such as assets, deposits, or capital and other factors, including business models?
- How could performance context be included in such a metric-based approach?
- In a metric-based framework, additional weight could be given to certain categories of CRA-qualifying activities, such as activities in certain geographies, including LMI areas near bank branches; activities targeted to LMI borrowers; or activities that are particularly innovative, complex, or impactful on the bank’s community. How could a metric-based framework most effectively apply different weighting to such categories of activities? For example, should a $1 loan product count as $1 in the aggregate, while a $1 CD equity investment count as $2 in the aggregate?
- How can community involvement be included in an evaluation process that uses a metric-based framework?
- For purposes of evaluating performance, CD services are not currently quantified in a standard way, such as by dollar value. Under a metric-based framework, how should CD services be quantified? For example, a bank could calculate the value of 1,000 hours of volunteer work by multiplying it by an average labor rate and then include that number in the aggregate total value of its CRA activity.
- How could the current approach to delineating assessment areas be updated to consider a bank’s business operations, in addition to branches and deposit-taking ATMs, as well as more of the communities that banks serve, including where the bank has a concentration of deposits, lending, employees, depositors, or borrowers?
- Should bank activities in the LMI geographies surrounding branches and deposit-taking ATMs, or in other targeted geographic areas, be weighted (and if so, how), or should some other approach be taken to ensure that activities in those areas continue to receive appropriate focus from banks, such as requiring banks to have some minimum level of performance in the metropolitan statistical area (MSA) and non-MSA areas in which they have domestic branches before receiving credit for activity outside those areas?
- How should “community and economic development” be defined to better address community needs and to incentivize banks to lend, invest, and provide services that further the purposes of the CRA? For example, should certain categories of loans and investments be presumed to receive consideration, such as those that support projects, programs, or organizations with a mission, purpose, or intent of community or economic development; or, within such categories, only those that are defined as community or economic development by federal, state, local, or tribal governments?
- Should there be specific standards for CD activities to receive consideration, such as requiring those activities to provide identified benefits to LMI individuals and small business borrowers or to lend to and invest in LMI communities or other areas or populations identified by federal, state, local, or tribal government as distressed or underserved, including designated major disaster areas (hereinafter referred to as “other identified areas” or “other identified populations”)?
- Are there certain categories of CD activities that should only receive consideration if they benefit specified underserved populations or areas, such as providing credit or technical assistance to small businesses or small farms; credit or financial services to LMI individuals or other identified populations (such as the disabled); or social services for LMI individuals or job creation, workforce development, internships, or apprentice programs for LMI individuals or other identified populations?
- Should consideration for certain activities that might otherwise qualify as CD be limited or excluded? For example, how should investments in loan-backed securities be considered?
- How should financial education or literacy programs, including digital literacy, be considered?
- Should bank activities to expand the use of small and disadvantaged service providers receive CRA consideration as CD activities?
- The current regulatory framework provides for CRA performance evaluations to consider home mortgage, small business, and small farm lending, and consumer lending in certain circumstances. Should these categories of lending continue to be considered as CRA-qualifying activities or should consideration in any or all of these categories be limited to loans to LMI borrowers and loans in LMI or other identified areas?
- Under what circumstances should consumer lending be considered as a CRA-qualifying activity? For example, should student, auto, credit card, or affordably priced small-dollar loans receive consideration? If so, what loan features or characteristics should be considered in deciding whether loans in these categories are CRA-qualifying?
- Under what circumstances should small business loans receive CRA consideration? For example should consideration be given to all loans to businesses that meet the Small Business Administration standards for small businesses?
- How should small business loans with a CD purpose be considered?
- Should a bank’s loan purchases and loan originations receive equal consideration when evaluating that bank’s lending performance?
- Should loans originated by a bank to hold in portfolio be weighted differently from loans originated for sale? If so, how?
- Should bank delivery channels, branching patterns, and branches in LMI areas be reviewed as part of the CRA evaluations? If so, what factors should be considered?
- The CRA states that the agencies may take into consideration in the CRA evaluation of a non-minority-owned and non-women-owned financial institution (majority-owned institution) any capital investment, loan participation, and other venture undertaken in cooperation with MWLIs, even if these activities do not benefit the majority-owned institution’s community, provided that these activities help meet the credit needs of local communities in which the MWLIs are chartered. What types of ventures should be eligible for such consideration, and how should such ventures be considered?
- Could the reporting of data gathered using a metric-based approach on a regular, periodic basis better support the tracking, monitoring, and comparison of CRA performance levels?
- How frequently should banks report CRA activity data for the OCC to evaluate and report on CRA performance under a revised regulatory framework?
- As required by law, and to the extent possible, the OCC attempts to minimize regulatory burden in its rulemakings consistent with the effective implementation of its statutory responsibilities. The OCC is committed to evaluating the economic impact of, and costs and benefits associated with, any changes that are proposed to the CRA regulations. Under the current regulatory framework, what are the annual costs, in dollars or staff hours, associated with CRA-related data collection, recordkeeping, and reporting?
In addition to these thirty-one questions, the OCC is inviting other ideas and options for modernizing the CRA regulatory framework not identified in this ANPR.