Last week, the Office of the Comptroller of the Currency (OCC) launched a process to solicit advice from the public on changes to how the Community Reinvestment Act (CRA) is enforced. Some of the changes the OCC contemplates in their Advance Notice of Proposed Rulemaking (ANPR) could have profound ramifications for low-wealth communities and the CDFIs operating in these markets. Opportunity Finance Network encourages everyone who cares about access to capital, credit, and financial services in underserved communities to join us in actively participating in this important policy debate.
In early August, OFN’s President & CEO, Lisa Mensah, and I were invited to a small meeting with the Comptroller of the Currency, Joseph M. Otting, where he previewed some of the proposals put forward in last week’s ANPR. During our meeting and in the ANPR, Otting proposed assessing bank compliance with CRA by applying a universal metric or mathematical formula whereby the dollar value of a bank’s CRA activities is divided by an as-yet undetermined measure of the bank’s assets. OFN worries that smaller, more impactful and complicated activities (like those CDFIs undertake) will be disadvantaged in an enforcement regime focused on a single numerical measurement. Lisa raised this concern directly with Comptroller Otting at our August meeting.
COORDINATING AN INDUSTRY RESPONSE: WHAT’S NEXT
OFN will provide recommendations to the OCC within the comment period of 75 days by consulting with our members and other CDFI leaders and coordinating a response. Our inclusive process is designed to result in a well-informed reply. We will shortly provide an analysis of the ANPR, and draft comments for CDFIs and others to use in developing their own comment letters. As an initial step in this process, we are scheduling a “Staying Connected on Policy” call for OFN members next week and will post CRA resources on the Public Policy section of the OFN website in the near future. We will also discuss the OCC’s CRA reform initiative at the 2018 OFN Annual Conference, on October 8-11 in Chicago.
GENERAL INFORMATION ABOUT THE ANPR
Format: The ANPR solicits feedback on 31 questions about the CRA regulatory framework. Most are fairly open-ended.
Deadline: Responses must be submitted by November 19, 2018.
Process:The three national bank regulators (the OCC, the Federal Reserve, and the Federal Deposit Insurance Corporation) usually act in concert when soliciting public comment on major policy changes like those contemplated in the ANPR. It is unusual that OCC issued this ANPR on its own but Comptroller Otting has suggested that any new CRA regulations would come via a joint proposal from all three regulators.
Since its passage in 1977, the Community Reinvestment Act has played a positive role in expanding access to home ownership, small business loans and consumer financial services in low and moderate-income communities. Updating CRA’s regulatory framework to address the banking environment and challenges of 2018 is desirable but the needs of communities – not the convenience of banks and regulators – must continue to be the overarching priority.