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Financial Services Law Insights and Observations


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  • OCC releases June CRA evaluations for 21 institutions

    Recently, the OCC released its Community Reinvestment Act (CRA) performance evaluations for June. The OCC evaluated 21 entities, including national banks, federal savings associations, and insured federal branches of foreign banks. The assessment framework has four possible ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. Of the 21 evaluations reported by the OCC, 14 entities were rated “Satisfactory,” six entities were rated “Outstanding,” and one was rated “Needs to Improve.” A full list of the bank evaluations is available here. In the CRA FAQ , the OCC details how it evaluates and rates financial institutions based two categories: first, the institution, examining factors such as capacity, constraints, business strategies, competitors, and peers, and second, the community it serves, analyzing its demographic particulars, economic data, and the availability of lending, investment, and service opportunities.

    Bank Regulatory OCC CRA FAQs

  • OCC releases May CRA evaluations for 19 institutions

    On June 3, the OCC released its Community Reinvestment Act (CRA) performance evaluations for May. The OCC evaluated 19 entities including national banks, federal savings associations, and insured federal branches of foreign banks. The assessment framework incorporated four possible ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. Of the 19 evaluations reported by the OCC, eleven entities were rated “Satisfactory,” and eight entities were rated “Outstanding.” There were no institutions that received a rating of “Needs to Improve.” A full list of the bank evaluations is available here. In the FAQ section regarding the implementation of the CRA, the OCC detailed how it evaluated and rated financial institutions both on an institutional level and a community level. This explanation included an examination of institutional factors such as capacity, constraints, business strategies, competitors, and peers, as well as an analysis of the characteristics of the communities served by these institutions, which covered demographic particulars, economic data, and the availability of lending, investment, and service opportunities.

    Bank Regulatory OCC CRA Bank Supervision Supervision FAQs

  • Agencies issue host state loan-to-deposit ratios

    On May 31, the FDIC, Fed, and OCC (the agencies) released the current host state loan-to-deposit ratios for each state or territory, which the agencies used to determine compliance with Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act). Under the Interstate Act, banks were prohibited from establishing or acquiring branches outside of their home state for the primary purpose of deposit production. Branches of banks controlled by out-of-state bank holding companies were also subject to the same restriction. Determining compliance with Section 109 required a comparison of a bank’s estimated statewide loan-to-deposit ratio to the annual host state loan-to-deposit ratios. If a bank’s statewide ratio was less than one-half of the published state ratio, an additional review would be undertaken by the appropriate agency, which would involve a determination on whether the bank’s interstate branches were reasonably helping to meet the credit needs of the communities. A bank that failed in both the ratio and assessment would violate Section 109 and subjected to sanctions by the appropriate agency.

    Bank Regulatory OCC FDIC Federal Reserve Bank Compliance

  • OCC’s Hsu speaks on recovery planning to avoid banking crises

    On May 27, the Acting Comptroller of the Currency, Michael J. Hsu, delivered a speech emphasizing the importance of recovery planning in mitigating the risks associated with bank crises. Hsu argued that while preventing crises through risk management, capital and liquidity requirements, and strong supervision was the primary goal, having a robust recovery plan was critical for stabilizing banks and restoring confidence in stressful times. He noted his comments came in light of recent bank failures in the U.S. and abroad.

    Acting Comptroller Hsu drew an analogy to the philosophical “trolley problem,” highlighting the difficult choices regulators face. Hsu emphasized how banks and their regulators need actionable recovery plans with options to sell certain portfolios or businesses, increase liquidity and capital, or reduce risk-weighted assets to avoid losses. The Acting Comptroller also detailed how effective recovery plans should incorporate timely triggers for action, thorough impact assessments, and clear communication with stakeholders. He concluded by calling for the application of recovery planning requirements to all large banks with at least $100 billion in assets (down from the current $250 billion in assets requirement) suggesting that applying recovery planning guidelines in this manner could have mitigated recent regional bank failures and limited losses to the Deposit Insurance Fund.


    Bank Regulatory OCC Liquidity Risk Management

  • Agencies extend applicability date of certain provisions of their Community Reinvestment Act final rule

    Agency Rule-Making & Guidance

    On March 21, the FDIC, Fed, and OCC jointly issued an interim final rule to extend the applicability date of certain provisions of the Community Reinvestment Act (CRA) final rule and requested comments on the extension. As previously covered by InfoBytes, the final rule was intended to modernize how banks comply with the CRA, a law that encouraged banks to help meet the credit needs of low- and moderate-income communities.

    Stated “[t]o promote clarity and consistency,” the agencies have postponed the applicability date of the facility-based assessment areas and public file provisions from April 1, 2024, to January 1, 2026. As a result, banks would not be required to modify their assessment areas or public files in response to the final rule until the new 2026 date. This extension would put these elements on the same timeline as other components of the 2023 CRA final rule that also would take effect on January 1, 2026, including the performance tests and geographic area provisions.

    The agencies also made technical, non-substantive updates to the CRA final rule and related agency regulations that reference it. One of these technical adjustments specified that banks are not required to update their public CRA Notices until January 1, 2026. Public comments on the postponed implementation date must be received 45 days following the rule's publication in the Federal Register.

    Agency Rule-Making & Guidance Bank Regulatory Federal Issues OCC FDIC CRA

  • Bank regulators respond to bankers’ motion to enjoin CRA final rule


    On March 8, the Fed, OCC, and FDIC (the federal banking agencies, or “FBAs”) submitted a brief opposing the plaintiffs’ motion for a preliminary injunction to stop the CRA final rule from going into effect. As previously covered by InfoBytes, a group of trade, banking, and business associations filed a class-action complaint for injunctive relief against the bank regulators’ enforcement of the final rule to implement the CRA before it goes into effect on April 1. The FBAs assert that, in opposing the final rule, the plaintiffs are asking the court to “graft” two exclusions from the CRA’s purpose that are not actually in the statute: first, to exclude geographic areas where a bank conducts retail lending from the scope of the bank’s “entire community”; and second, to exclude a bank’s deposit activities from the assessment on whether a bank is meeting its entire community’s “credit needs.” The banking regulators also argued that the plaintiffs’ motion for preliminary relief should fail because the plaintiffs cannot show irreparable harm, in that they have failed to demonstrate that costs to comply with the CRA final rule, which would not apply until 2026 and 2027, were significant when considered in the context of the bank’s overall finances. Finally, the FBAs argued that the public interest and balance of equities favor allowing the final rule to proceed, as, among other factors, “the rule provides significant regulatory relief and lower compliance costs for smaller institutions by increasing the asset size thresholds that determine which performance tests apply to an institution.” 

    Courts Bank Regulatory CRA OCC FDIC Federal Reserve Agency Rule-Making & Guidance Litigation

  • FFIEC highlights the importance of property valuation practices

    On February 12, the Federal Financial Institutions Examination Council (FFIEC) released a statement on examination principles related to ensuring fair and creditable residential property valuation practices among supervised institutions. The FFIEC underscored the necessity for institutions to comply with anti-discrimination laws and regulations, such as the ECOA and the Fair Housing Act, while also adhering to safety and soundness regulations outlined in statutes like the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. According to the statement, effective valuation review programs are essential for identifying and addressing deficiencies, ensuring compliance with appraisal regulations, and promoting fair lending practices. Through examination processes, both in consumer compliance and safety and soundness assessments, the FFIEC aimed to mitigate risks associated with valuation discrimination or bias.

    Bank Regulatory FFIEC Fair Housing ECOA OCC Fair Housing Act

  • Hsu notes a “trip wire approach” for FSOC review of payments, private equity systemic risk

    On February 21, Acting Comptroller of the Currency Michael Hsu delivered remarks at Vanderbilt University, discussing banking and commerce, regulatory effectiveness, and financial stability. Hsu further discussed the “blurring of the line” between banking and private credit/equity, its relevance to different market crashes, and how it can create risk. Hsu mentioned the potential to fill a regulatory gap regarding payments.

    Hsu highlighted that the FSOC’s recent analytic framework indicated vulnerable points that can commonly contribute to financial stability risks and discussed how FSOC may address the risks. The framework also established how the council determines whether a given nonbank should be under the Fed’s supervision and prudential standards (covered by InfoBytes here). In his speech, Hsu defines banking as “institutions that take deposits, make loans, and facilitate payments” and commerce as “everything else” including nonbank finance. 

    He added that the FSOC should use its macro-prudential tools to address risk and develop metrics and thresholds to identify when a payments or private equity firm may need an assessment of systemic risk. This “trip wire approach” would leverage the FSOC’s framework, moving a firm from the identification phase to the assessment phase of the FSOC’s analytic framework, and the assessment would inform if there was a need for FSOC response. Because of the rise in cash managed by nonbanks on behalf of consumers, Hsu said that could serve as a metric for the trip wire for payments-focused fintechs and other nonbank companies. “The standardization, scalars, and level at which an FSOC assessment would be triggered would be informed by public comment,” he added. Finally, Hsu highlighted how the trip wire approach offered a transparent and proactive method for identifying and addressing systemic risks before they escalate. 

    Bank Regulatory Federal Issues FSOC OCC Payments Nonbank Risk Management

  • Agencies issue final rule to modernize Community Reinvestment Act regulations

    Agency Rule-Making & Guidance

    On October 24, the Fed, FDIC, and OCC issued an interagency announcement regarding the modernization of their rules under the Community Reinvestment Act (CRA), a law enacted in 1977 to encourage banks to help meet the credit needs of their communities, especially low- and moderate-income (LMI) neighborhoods, in a safe and sound manner. The new rule overhauls the existing regulatory scheme that was first implemented in the mid-1990s.

    For banks with assets of at least $2 billion (Large Banks), the final rule adds a new category of assessment area to the existing facility based assessment area (FBAA). Large Banks that do more than 20 percent of their CRA-related lending outside their FBAAs will have that lending evaluated in retail lending assessment areas, i.e., MSAs or states where it originated at least 150 closed-end home mortgage loans or 400 small business loans in both of the previous two years. All Large Banks will be subject to two new lending and two new community development tests, with lending and community development activities each counting for half a bank’s overall CRA rating. Banks with assets between $600 million and $2 billion will be subject to a new lending test. Large Banks with assets greater than $10 billion will also have special reporting requirements.

    Additionally, the rule (i) implements a standardized scoring system for performance ratings; (ii) revises community development definitions and creates a list of community development activities eligible for CRA consideration, regardless of location; (iii) permits regulators to evaluate “impact and responsiveness factors” of community development activities; (iii) continues to make strategic plans available as an alternative option for evaluation; (iv) revises the definition of limited purpose bank so that it includes both existing limited purpose and wholesale banks and subjects those banks to a new community development financing test; and (v) considers online banking in the bank’s evaluations.

    Most of the rule’s requirements will be effective January 1, 2026. The remaining requirements, including the data reporting requirements, will apply on January 1, 2027.

    Agency Rule-Making & Guidance Federal Issues OCC Federal Reserve CRA Supervision Capital Requirements Consumer Finance Redlining

  • OCC updates cybersecurity exam procedures

    On June 26, the OCC issued Bulletin 2023-22 announcing recent updates to the agency’s approach to cybersecurity assessment procedures. The Cybersecurity Supervision Work Program (CSW) provides high-level examination objectives and procedures aligned with the National Institute of Standards and Technology Cybersecurity Framework (NIST-CFS) and is part of the agency’s risk-based bank information technology supervision process. The CSW is intended to provide examiners an effective approach for identifying cybersecurity risks in supervised banks.

    According to an overview provided by the OCC, the CSW “provides examiners with a common framework and terminology in discussions with bank management” and is structured according to the following NIST-CSF functions: identify, protect, detect, respond, and recover (as well as related categories and subcategories). The OCC also developed an additional function, Specialty Areas, to address areas of risk that may be part of OCC cybersecurity assessments, where applicable. Examiners will use these procedures to supplement those outlined in the “Community Bank Supervision,” “Large Bank Supervision,” and “Federal Branches and Agencies Supervision” booklets of the Comptroller’s Handbook, the FFIEC’s Information Technology Examination Handbook booklets, and other related supervisory guidance.

    The OCC encourages supervised banks to use standardized approaches to assess and improve cybersecurity preparedness. Banks may choose from a variety of standardized tools and available frameworks, and should use the agency’s CSW cross-references table for further guidance. No new regulatory expectations are established with the issuance of the CSW.

    Bank Regulatory Federal Issues Privacy, Cyber Risk & Data Security OCC Supervision Examination NIST


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