OCC Finalizes Rules that Threaten the Community Reinvestment Act Amidst a Global Health Pandemic

The Association for Neighborhood & Housing Development (ANHD) is outraged by the Office of the Comptroller of the Currency (OCC)’s decision to unilaterally finalize rules that threaten the Community Reinvestment Act (CRA), a key civil rights era law that requires banks to lend equitably and act responsibly, amidst a global pandemic that is disproportionately harming low-income, Black and Brown communities. Comptroller Joseph Otting released this proposal just days before his departure from the OCC, leaving others to clean up the mess of a rushed regulation.

The CRA was passed to address disinvestment and redlining in low-income communities of color, and these final rules are poised to weaken the law for the nation’s largest banks at a time when we can least afford to do so. Rather than focus on COVID relief and long-term recovery, the OCC devoted scarce resources to rushing through this proposal. And now stakeholders across the spectrum - community organizations, financial institutions,regulators, and elected officials - must divert time and resources to understand the final rules that will result in less meaningful investment for our communities over time.

Due to unprecedented organizing by community organizations, legislators, and civil rights groups nationwide against the original proposal - including ANHD and our members and allies - we see that the OCC incorporated some of the changes we asked for within the proposal. They also substantially delayed implementation of the new one-ratio evaluation metric, which creates a complicated formula that ranks banks on a measure of the totality of bank reinvestment dollars as compared to deposits.

But make no mistake about it: the core one-ratio evaluation framework and much of the proposal remains despite widespread opposition. The approach emphasizes quantity over quality, reduces analysis of branches and affordable banking products, and expands CRA activities - including loans to larger businesses and investments in opportunity zone funds - all the while minimizing public input and community needs, and doing nothing to address displacement of tenants or small businesses. The agency even acknowledged they ignored the concerns stating, “Although commenters disagreed with the approach outlined in the proposal, the agency ultimately agreed with the minority of commenters who expressed support for the proposed framework.”

Also telling is that the OCC could not get agreement from the other banking regulators. The Federal Deposit Insurance Corporation (FDIC) has correctly chosen to hold off on a final rulemaking as theirs and all banks are responding to COVID-related needs. We urge them to abandon the proposal entirely and work with the Federal Reserve on a thoughtful, responsive approach that has the potential to modernize and strengthen the CRA, not weaken it.

While more in depth analysis must be conducted, the CRA is one of the fundamental tools we have to hold banks accountable. With this pandemic ripping through our economy, we need banks to take proactive steps to mitigate the resulting economic fallout. We do not need more leeway for banks to skirt this responsibility, which these final rules from the OCC have created. ANHD will work with our coalition partners and allies to hold the OCC accountable for this decision and fight for the livelihood of our communities.