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Financial Services Law Insights and Observations

OCC addresses qualifying activities for CRA final rule

Agency Rule-Making & Guidance OCC CRA

Agency Rule-Making & Guidance

On January 4, the OCC issued interpretive letter #1177, which addresses qualifying activities of the affiliates and subsidiaries of national banks and savings associations under the OCC’s 2020 final rule to modernize the regulatory framework implementing the Community Reinvestment Act (CRA). As previously covered by a Buckley Special Alert here, the 2020 final rule, among other things (i) updated deposit-based assessment areas; (ii) mandated the inclusion of consumer loans in CRA evaluations; and (iii) included a non-exhaustive illustrative list of activities that qualify for CRA consideration. The interpretive letter states that qualifying activities under the 2020 final rule may include the CRA qualifying activities of the consolidated subsidiaries of a bank, but that a bank’s qualifying activities generally do not include the activities of the bank’s nonbank affiliates. The OCC notes that the “very factors demonstrating the tight link between a bank and its consolidated subsidiary…suggest that activities conducted by a bank’s parent and sister companies should generally not receive CRA credit.” Thus, banks will not be given credit for qualifying activities conducted by such affiliates unless the bank “directly financed or otherwise supported such activities.”

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