OCC Issues Final CRA Rule

Today the Office of the Comptroller of the Currency (OCC) released its final rule on Community Reinvestment Act (CRA) Regulations and a non-exhaustive list of CRA activities. The proposed rule included a doubling of credits for certain community development (CD) activities, including LIHTC investments, which raised concerns that banks could decrease their LIHTC investments and achieve the same CRA exam results. The final rule stipulates that a bank is not eligible for multipliers until the quantified dollar values of its current period CD activities are approximately equal to the quantified dollar values of CD activities considered in its prior evaluation period. The final rule also allows banks serving as syndicators or sponsors of LIHTC or New Markets Tax Credit (NMTC) projects to receive credit for the total dollar value of the fund in the year it was originated. The syndicating or sponsoring bank will also receive additional credit for the LIHTC or NMTC investment after the transaction is complete.

We’re still reading the proposed rule and will provide additional analysis in the weeks to follow. Last year, the Federal Reserve Board (FRB) declined to join the proposed rulemaking and the Federal Deposit Insurance Corporation (FDIC) declined to join today’s final rule saying in a statement, “While the FDIC strongly supports the efforts to make the CRA rules clearer, more transparent, and less subjective, the agency is not prepared to finalize the CRA proposal at this time. The FDIC recognizes the herculean effort community banks are making to support America’s small businesses and families during this challenging time and encourages financial institutions to work constructively with borrowers affected by COVID-19.”

The rule comes just six weeks after the comment deadline, for which the OCC received over 7,500 comments. The rule is effective as of October 1, 2020 and most OCC regulated banks must meet the standards set forth in the final regulations for their first CRA exam after January 1, 2023, small and intermediate banks have until January 1, 2024.

The OCC supervises national banks, federal savings associations and federal branches and agencies of foreign banks.

The Federal Deposit Insurance Corporation (FDIC supervises state-chartered banks that are not members of the Federal Reserve System and State-chartered savings associations. The FDIC also insures deposits in banks and savings associations in the event of bank failure.

The Federal Reserve Board (FRB) supervises state-chartered banks that are members of the Federal Reserve System.

Total Depository Institutions by Regulator, 2018

    In Millions
Regulator Total
Institutions
Total
Assets
Average Assets
per Institution
Total
Deposits
Average Deposits
per Institution
FDIC 3,617  $2,935,844  $812  $2,303,812  $637
FRB 817  $2,816,492  $3,447  $2,234,093  $2,735
OCC 1,210  $11,753,175  $9,713  $8,910,930  $7,364
Total 5644 $17,505,511  $13,448,835

Source: 2018 U.S. Department of the Treasury Memo