On December 14, 2021, the U.S. Office of the Comptroller of Currency (“OCC”) adopted a new final rule (“Final Rule”) under the Community Reinvestment Act of 1977, as amended (the “CRA”) which will be effective on January 1, 2022, with certain compliance requirements delayed to April 1, 2022. The Final Rule replaces the Community Reinvestment Act rule that was proposed by the Trump Administration June 5, 2020 (the “June 2020 Rule”), which is effective from October 1, 2020 until its replacement by the Final Rule; some of the more material aspects of the June 2020 Rule had delayed compliance dates beginning on January 1, 2023, or January 1, 2024. Since substantial portions of the June 2020 Rule had not been implemented, the Final Rule, in sum keeps much of the existing CRA rules in force and provides a platform for future rulemaking by the OCC, the Board of Governors of the Federal Reserve System (“Board”), and Federal Deposit Insurance Corporation (“FDIC” and, collectively with the OCC and Board, the “Banking Agencies”).
The primary purpose of CRA is to encourage insured depository institutions (“IDIs”) to help meet the credit needs of the communities in which they are chartered, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institutions.
The Final Rule is largely a reinstatement of the 1995 CRA rules (“1995 CRA Rules”) that were jointly promulgated by the Banking Agencies. The OCC states in the Final Rule that it is intended to drive cooperation among the Banking Agencies for collaboration to make further CRA refinements and that another benefit of the Final Rule is the reestablishment of uniformity of enforcement of CRA requirements on IDIs among the Banking Agencies. The June 2020 Rule had been unilaterally adopted by the OCC without the concurrence of the Board or FDIC.
Importantly, Final Rule generally re-adopts the 1995 CRA Rules definitions of “qualifying activities”. The Banking Agencies believe that this change will promote confidence that (1) IDIs will receive consideration for activities that the Banking Agencies have collectively recognized help to meet community credit needs; (2) consistent rules from each Banking Agency will apply to all IDIs; (3) IDIs will receive credit for dollars that are already legally committed; and (4) the OCC will be able to work more effectively with the Board and the FDIC to determine the types of activities that should receive consideration under any future Banking Agencies’ CRA rules. The Final Rule includes a provision in subpart D that explains when activities will qualify for CRA consideration in CRA examinations based on the rule that was in effect at the time that the activities were conducted.
The Final rule offers the following key changes to the rescinded June 2020 Rule.
The Final Rule reinstates different performance tests and standards for banks of different sizes, structures, and operations. Specifically, the Final Rule provides an assessment method for:
The Final Rule allows any bank, regardless of its size or business strategy, the option to allow its prudential regulator to evaluate it under its strategic plan (see below for updates to strategic plan requirements).
The Final Rule also:
The Final Rule delays until April 1, 2020, certain new requirements under:
Please reach out to the authors on any questions related to these topics. As we have in the past, we will continue to monitor these issues and will provide future client updates. This QuickStudy is for guidance only and is not intended to be a substitute for specific legal advice.
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