Trump-era CRA ruling to be reconsidered under new acting comptroller

The Office for the Comptroller of the Currency has promised to reconsider changes it announced last year to its implementation of the Community Reinvestment Act, eight days after Michael Hsu took office as acting comptroller of the currency.

The OCC announced the revision in a bulletin of 18 May, overriding the 2023 and 2024 projected compliance dates for the rulings made in May last year.

The CRA, passed in 1977 in an effort to combat discriminatory redlining practices, gives US banks credit for loans made to lower-income communities.

Last year the OCC announced changes to its implementation of the act, clarifying what types of activity qualified for CRA consideration and how banks were to define their assessment areas.

Then-comptroller Joseph Otting, who stepped down one day after the OCC announced the CRA ruling, had previously said the CRA reform  was his principal goal for his time in office.

Although Otting claimed the reform would help evaluate bank CRA performance more objectively and make the process more transparent, it was widely criticised by US progressives, who warned it risked weakening the act’s impact on disadvantaged communities, and spawned several lawsuits.

The review was announced by Grovetta Gardineer, the OCC’s senior deputy comptroller for bank supervision policy.

It comes only eight days after the OCC came under the leadership of new acting comptroller Michael Hsu, the fourth holder of the position in the past year since Otting’s departure.

The OCC’s bulletin yesterday said that it wanted an “orderly reconsideration” of the June 2020 rule, while removing the projected compliance date for the ruling to allow banks more flexibility to concentrate on their response to the covid-19 pandemic.

“These actions also provide the OCC with the opportunity to consider additional stakeholder input, to evaluate issues and questions that have been raised, to reassess the necessary data, and to take additional regulatory action, as appropriate.”

Some of the reform’s provisions will remain in effect, the OCC said, highlighting those that had an October 2020 compliance date.

These will include regulations around bank type determinations and lists of distressed and underserved areas, as well as the process for requesting confirmation on whether an activity meets the qualifying criteria.

Responding to the review, US senator Sherrod Brown, chair of the US Senate banking committee, said that the OCC was taking “a step in the right direction”. He added that last year’s ruling had been “jammed through” against the advice of civil rights leaders, community development activists, and local voices.

“All three banking regulators should now get to work on a joint proposal that will strengthen the CRA and increase investments in underserved communities and communities of colour”, he added – noting that the OCC had originally acted alone when it moved to change the CRA framework, leaving behind its fellow regulators tasked with administering the act, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).

That resulted in FDIC chair Jelena McWilliams baulking at implementing the change, saying her agency, which had jointly consulted on the rule change alongside the OCC, was “not prepared to finalise the CRA proposal” because of the covid-19 pandemic.


The American Bankers Association has called for the rule’s formal withdrawal in response to the announcement. Rob Nichols, president and CEO of the association, said that the rule’s compliance date should be delayed or officially scrapped.

“By reconsidering its CRA Rule, the OCC provides an opportunity for the regulatory agencies to pursue a joint rulemaking in this area,” he said. “We still believe there is a compelling need to modernise CRA rules so they reflect the modern banking system and meet the needs of communities.”

Earlier this month, Federal Reserve chairman Jerome Powell had signalled his support for review of the CRA, saying that its regulations should apply to all credit providers, including nonbanks.

Speaking at the 2021 Just Economy conference, Powell said that “low and moderate income communities require credit support regardless of … the nature of the institution”.

Keith Noreika, who served as acting comptroller of the currency for seven months before Otting took office in 2017, tells GBRR the revision would be “a great opportunity for the agencies jointly to modernise CRA”.

Currently partner at Simpson Thacher & Bartlett, he says an update remains necessary in the context of “rapidly evolving” banking systems. “We’ve seen the various proposals and now is the ideal time, at the beginning of a new administration, for the agencies to come together to modernise”.

The Bank Policy Institute, a research group, also welcomed the announcement. Senior vice president and associate general counsel Dafina Stewart said, “We look forward to the OCC’s re-engagement in the interagency process to craft a unified CRA regulatory framework.”


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