The OCC released its final rule to reform Community Reinvestment Act regulations. Because the FDIC and Federal Reserve declined to sign on to the rule, it will apply only to national banks and savings associations.
The 372-page final rule clarifies what qualifies for CRA consideration, updates how banks define assessment areas, and introduces quantitative measures to assess the volume and value of activity, among many other provisions. The rule is set to take effect in October, though examination standards will not be in place for two years.
The FDIC said Wednesday it will not join the OCC in finalizing the agency proposal and that it recognizes the outsized effort of community banks to support small businesses and families amid the COVID-19 pandemic. The Federal Reserve said in December that it would not join the other agencies when the rule was proposed.
In a statement, ICBA said it supports provisions in the final rule allowing community banks up to $2.5 billion in assets to remain under the existing CRA framework—as advocated by ICBA in its comment letter. The new opt-in threshold is up from $500 million in the OCC's proposal.
Among other updates that reflect ICBA advocacy, the final rule also provides that retail loan originations sold within a year of origination will receive credit for 100 percent of the origination value—up from 25 percent for loans sold within 90 days. It also will provide additional consideration to minority depository institutions, as advocated by ICBA.
However, community banks remain concerned that the new regulatory framework is too complex and would impose new and excessive data-collection costs that could inhibit their ability to serve local communities, ICBA President and CEO Rebeca Romero Rainey said. ICBA will continue reviewing the final rule and working with all regulatory agencies on CRA modernization.