On June 5, 2020, the Office of the Comptroller of the Currency (OCC) released a final rule to modernize its Community Reinvestment Act (CRA) framework (June 2020 Rule). After the other regulatory agencies failed to follow suit, the OCC issued a proposed rule to rescind the June 2020 Rule in favor of working together with the other agencies to develop a new framework. The OCC proposed to replace the existing 12 CFR part 25 with a revised 12 CFR part 25 based on the 1995 Rules and reinstate 12 CFR part 195 (for savings associations). The proposal makes 12 CFR part 25 substantively identical to the 1995 rule again. All definitions, performance tests and standards, and related data collection, recordkeeping, and reporting requirements would revert to those in place before the OCC issued the June 2020 Rule. Also, the rules surrounding the public file and public notice requirements would revert to those in the 1995 rule. The proposed rule applies to all national banks and all federal and state savings associations. If you would like to comment on any aspect of the proposal, you must submit those before October 29, 2021. The June 2020 Rule will remain in effect until replaced by final rules based on this proposal.
How Do We Get Back There Again?
The OCC recognizes that banks have relied on the June 2020 Rule to plan for their ongoing compliance with the CRA. The agency also acknowledged that replacing the newly created framework impacts, among other things, how examiners evaluate banks and what qualifying activities they would consider in CRA examinations. Therefore, to ease the transition, the OCC proposed a transition plan to replace certain aspects of the June 2020 Rule, which it summarizes in a chart on page 38 of the proposed rule, https://www.occ.gov/news-issuances/federal-register/2021/nr-occ-2021-94a.pdf. Banks would have a minimum of 30 days following publication of any final rules regarding this proposal, before they would be required to comply with most of the provisions described in the proposed rule. Therefore, the OCC is considering an effective date of January 1, 2022, for any final rules, provided they are published by December 1, 2021.
Size Matters
Under the OCC’s abandoned CRA modernization effort, many banks changed type based on the new asset thresholds in the June 2020 Rule. As a result, they are now subject to different performance standards for activities conducted on or after October 1, 2020. Also, former “large banks” that became “intermediate banks” under the June 2020 Rule were no longer required to collect data for calendar years 2021 onward and report data for calendar years 2022 onward. Many of these banks will transition back to their prior bank size based on the now-proposed asset-size thresholds. Consistent with its historical practices, if the proposed rules take effect on January 1, 2022, the OCC will require newly-classified large banks to begin collecting data on January 1, 2023, and reporting required and optional data the following year. The OCC will not require banks transitioning from small banks to Intermediate Small Banks (ISB) to transition to the ISB performance standards. However, the OCC would consider the change in bank size as part of the bank's performance context when evaluating the bank's CRA performance.
Getting Credit Where Credit is Due
Under the proposed rule, OCC-regulated banks would receive consideration in their CRA examinations for activities that met the qualifying activities criteria or definitions that were in effect when the bank conducted those activities. The OCC will maintain the illustrative list of qualifying activities on its website to help banks determine whether the activities they performed while the June 2020 Rule was in effect are eligible for CRA consideration. However, activities included on the illustrative list may not receive consideration if conducted after the effective date of the final rules.
Where is That Public File?
The June 2020 Rule changed the public file requirements by reducing the information required in the public file and changing the requirements for how an OCC-regulated bank makes the public file available to the public, including permitting these banks to make the public file available solely on their websites. Under the proposed rules, banks would need to include additional information in their public file and make the file available at their main office. Interstate banks must make their public file available at one branch in each state and more limited information at each branch. Since the proposed rules would impose additional public file content and availability requirements, the OCC expects to provide in the final rule that banks would comply with these requirements no later than three months after the final rule's effective date.
But You Approved the Plan…
The June 2020 Rule permitted banks to include target market assessment areas when requesting approval for a strategic plan. The OCC proposes maintaining any strategic plans approved by the OCC under the June 2020 Rule and would not require these banks to amend their strategic plans.
Rest assured that Compliance Alliance is committed to helping OCC-regulated banks transition back to the old rules. We’ll be bringing you up-to-date information about the transition as it is released. C/A's CRA Toolkit also has summaries and other great tools to help you meet your CRA obligations. The OCC-specific tools in that toolkit will be developed after the OCC has issued a final rule that puts the 1995 Rules back into place. We’ll also be bringing all of our members the tools that you will need to comply with the interagency CRA framework as it is proposed. Make sure you are receiving our daily emails so that you can stay up on the latest news and to contact our Hotline team if you have specific questions as we take this trip together.