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Financial Services Law Insights and Observations


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  • Acting FDIC Chairman Gruenberg outlines CRA NPRM

    On June 13, acting FDIC Chairman Martin J. Gruenberg provided remarks before the National Community Reinvestment Coalition (NCRC) regarding the Community Reinvestment Act (CRA). In his remarks, Gruenberg discussed “ten important provisions” in the rule proposed by the Federal Reserve Board, FDIC, and OCC in May. As previously covered by InfoBtytes, the notice of proposed rulemaking (NPRM) updates how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. Calling the CRA “the foundation of responsible finance for low- and moderate-income communities in the United States,” Gruenberg noted that the “NPRM would significantly expand the scope and rigor of CRA and assure its continued relevance for the next generation.” To expand the scope of the CRA, he explained that the NPRM would “establish new retail lending assessment areas to allow for CRA evaluation in communities where a bank may be engaging in significant lending activity but where the bank does not have a branch.” He also noted that the NPRM would “raise the bar for CRA performance on the retail lending test in order for a bank to earn an outstanding or high satisfactory rating.” With respect to greater clarity for CRA evaluations, Gruenberg said that the NPRM would “clearly define community development activities by establishing eleven proposed categories of community development.” Regarding minority depository institutions, Gruenberg said that the NPRM “creates a specific community development definition for eligible activities, such as investments, loan participations, and other ventures conducted by all banks with these institutions.” Additionally, he noted that the NPRM would address credit or banking deserts, including rural areas, native lands, and areas of persistent poverty, and would encourage the retention or establishment of branches in low-to-moderate-income communities and low-cost transaction accounts.

    Bank Regulatory Federal Issues FDIC Federal Reserve OCC CRA MDI

  • Hsu highlights importance of MDIs, CDFIs

    On June 9, acting Comptroller of the Currency Michael J. Hsu spoke before the 2022 Community Development Bankers Association Peer Forum to discuss agency efforts to support underserved communities, as well as initiatives for revitalizing Minority Depository Institutions (MDIs) and increasing investments in Community Development Financial Institutions (CDFIs). Emphasizing the important role MDIs and CDFIs play in providing mortgage credit, small business lending, and other banking services to minority and low-to-moderate-income (LMI) communities, Hsu discussed ongoing challenges facing MDIs in terms of accessing capital and meeting customer needs. He noted that these challenges have caused many MDIs to close, fail, or be acquired by larger banks. Ensuring the survival of the remaining MDIs is important, Hsu said, since these are often the only financial institutions fulfilling minority communities’ financial needs. He further explained that the OCC is “doubling down” on Project REACh, which brings together leaders from the banking industry, national civil rights organizations, and various businesses and technology organizations to identify and reduce barriers to accessing capital and credit (covered by InfoBytes here), and stated that Project REACh has “challenged large and midsize banks to sign a pledge to revitalize MDIs with capital investments, technical assistance, business opportunities, executive training, and other resources.” Hsu also discussed recently proposed interagency rules to modernize enforcement of the Community Reinvestment Act (CRA), which will also benefit MDIs and CDFIs. As previously covered by InfoBytes, the Federal Reserve Board, FDIC, and OCC issued a joint notice of proposed rulemaking (NPRM) in May 2022 to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated.

    Bank Regulatory Federal Issues OCC CDFI MDI Underserved CRA Agency Rule-Making & Guidance Federal Reserve FDIC

  • FDIC, HUD announce New Mexico wildfire disaster relief

    On May 9, the FDIC issued FIL-19-2022 to provide regulatory relief to financial institutions and help facilitate recovery in areas of New Mexico affected by wildfires and straight-line winds that began on April 5. In the guidance, the FDIC writes that, in supervising institutions affected by the wildfires, it will consider the unusual circumstances those institutions face. The guidance suggests that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are done “in a manner consistent with sound banking practices.” Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC will also consider relief from certain reporting and publishing requirements.

    Separately, on May 6, HUD announced disaster assistance available to certain counties impacted by the New Mexico wildfires and straight-line winds, providing foreclosure relief and other assistance to affected homeowners. Specifically, HUD is providing an automatic 90-day moratorium on foreclosures of FHA-insured home mortgages for covered properties and is making FHA insurance available to those victims whose homes were destroyed or severely damaged. Additionally, HUD’s Section 203(k) loan program will allow individuals who have lost homes to finance the purchase of a house, or refinance an existing house and the costs of repair, through a single mortgage. The program also allows homeowners with damaged property to finance the repair of their existing single-family homes. Furthermore, HUD is allowing administrative flexibilities to community planning and development grantees, as well as to public housing agencies and Tribes.

    Bank Regulatory Federal Issues HUD Consumer Finance FDIC Mortgages Disaster Relief FHA CRA

  • Special Alert: Breaking down the proposed CRA overhaul

    Federal Issues

    The federal banking agencies last week announced their highly anticipated proposal to revamp and modernize regulations implementing the Community Reinvestment Act. The proposal may significantly impact the compliance obligations of large banks, which the proposal generally defines as those with assets greater than $2 billion, while granting smaller banks the option of continuing to comply under the existing framework. The proposal aims to bring to a close the CRA reform process that began more than a decade ago, and was marked most recently by the OCC’s decision to pull back its 2020 regulatory overhaul (as covered by InfoBytes here).

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

  • Agencies overhaul CRA requirements

    On May 5, the Federal Reserve Board, FDIC, and OCC (collectively, “agencies”) issued a joint notice of proposed rulemaking (NPRM) on new regulations implementing the Community Reinvestment Act (CRA) to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. According to the NPRM, the “CRA encourages banks to help meet the credit needs of the local communities in which they are chartered, consistent with a bank’s safe and sound operations, by requiring the Federal banking regulatory agencies to examine banks’ records of meeting the credit needs of their entire community, including low- and moderate-income neighborhoods.” The agencies are, among other things, proposing to:

    • Expand access to credit, investment, and banking services in low- and moderate-income (LMI) communities to promote community engagement and financial inclusion. The proposal would also evaluate bank lending to small businesses and farms with gross annual revenues of $250,000 or less to maintain focus on the borrowers with the greatest need;
    • Adapt changes to update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models;
    • Use a retail lending volume screen and metric-based performance ranges to evaluate a bank’s retail lending volumes. CRA evaluations of retail lending and community development financing will include public benchmarks for greater clarity and consistency. The proposal would also clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities;
    • Tailor CRA evaluations and data collection to recognize differences in bank size and business models. Smaller banks would continue to be evaluated under the existing CRA framework with the option of being evaluated under aspects of the proposed framework; and
    • Maintain a unified approach across agencies and incorporate stakeholder feedback.

    The agencies also released a Fact Sheet describing key elements of the proposal. Acting Comptroller of the Currency, Michael J. Hsu, called the issuance of the joint NPRM an “important milestone” in bringing the three federal banking agencies back together to develop a uniform approach for addressing inequalities in credit access and other financial services. Fed Governor Lael Brainard pointed out that “[t]he last major revisions to the CRA regulations were made in 1995.” “The CRA is one of our most important tools to improve financial inclusion in communities across America, so it is critical to get reform right,” she stressed. CFPB Director Rohit Chopra, who voted in favor of the NPRM as an FDIC board member, said the proposal “better effectuates Congressional directives intended to ensure that the needs of historically underserved individuals and communities are adequately met,” but reminded policymakers that it is also important “to consider whether nonbank mortgage lenders should also be required to better meet the needs of the communities they serve.” Treasury Secretary Janet Yellen similarly applauded the release of the NPRM. Comments on the NPRM are due August 5.

    A Buckley Special Alert is forthcoming.

    Bank Regulatory Federal Issues Agency Rule-Making & Guidance Federal Reserve FDIC OCC Department of Treasury CFPB CRA Consumer Finance

  • CFPB launches initiative to address financial issues facing rural communities

    Federal Issues

    On March 10, the CFPB launched an initiative focusing on financial issues facing rural communities in the U.S. Citing economic trends that have disproportionately affected rural communities over the past several decades, the Bureau stated its initial focus will center around banking deserts, discriminatory and predatory agricultural credit, and manufactured housing. Last month, CFPB Director Rohit Chopra hosted an event where individuals from organizations representing rural communities shared consumer financial concerns and discussed issues affecting the financial resilience of rural families. Among other things, attendees highlighted the issue of banking deserts caused by “stark declines in the number of banks in rural areas,” which has “led to non-bank alternatives that charge higher fees and interest rates.” Bank consolidation has also caused the loss of institutional knowledge, which in turn, has resulted in the disappearance of banking relationships, credit, small businesses, and jobs. Attendees stressed the need for Community Reinvestment Act requirements that would serve rural banking deserts, particularly in persistent poverty counties, most of which are overwhelmingly rural. Additionally, attendees raised issues related to discriminatory and predatory agricultural credit, with stakeholders pointing out that a long history of credit discrimination against Black farmers has contributed to the decline of Black farmers and Black land loss. Other stakeholders raised concerns that farmers’ obligations to banks can make them more vulnerable to exploitative arrangements with dominant agriculture firms. Manufactured housing concerns were also raised by attendees, who spoke about the lack of affordable housing in rural communities, explaining that “manufactured home parks are increasingly being bought up by private equity firms that have, in some cases, dramatically increased rents and tacked on fees in short periods of time.” The Bureau emphasized that it is “concerned about these threats to rural household financial resiliency” and has launched this initiative “to ensure that rural communities, and the people who live in them, have opportunities to build wealth and thrive.”

    Federal Issues CFPB Consumer Finance CRA Rural Communities Manufactured Housing

  • OCC issues CRA FAQs

    On February 22, the OCC issued Bulletin 2022-4 announcing responses to frequently asked questions (FAQs) regarding the December 2021 final rule rescinding the OCC’s Community Reinvestment Act (CRA) rule issued in June 2020. (The December 2021 final rule was covered by InfoBytes here.) According to the OCC, highlights of the FAQs include providing general information regarding the final rule, and addressing inquires related to, among other things: (i) the impact of the final rule on CRA bank type; (ii) qualifying activities and the qualifying activity confirmation request system; (iii) the transition period; (vi) examination administration; and (v) assessment areas.

    Bank Regulatory Federal Issues OCC CRA

  • Hsu predicts CRA proposal in “not-too-distant” future

    On February 14, acting Comptroller of the Currency Michael J. Hsu announced that the OCC, Federal Reserve Board, and the FDIC plan to release a joint notice of proposed rulemaking for strengthening and modernizing the Community Reinvestment Act (CRA) in the “not-too-distant future.” Speaking before the National Community Reinvestment Coalition, Hsu stressed the importance of expanding financial access and inclusion for low- and moderate-income (LMI) communities, and explained that while banks have made substantial CRA investments in these communities, “significant disparities continue to exist in many LMI areas and are most prevalent for Black, Hispanic, and Native American communities and borrowers across our nation.” As previously covered by InfoBytes, the OCC’s 2020 final rule to modernize the CRA was formally rescinded in December to facilitate ongoing interagency work. Stating that the Fed’s September 2020 Advance Notice of Proposed Rulemaking on CRA modernization (covered by InfoBytes here) has served as the “basic framework” for current interagency discussions, Hsu outlined several overarching objectives including: (i) increasing levels of CRA activity to help persistent disparities, particularly in LMI communities, “to ensure that banks are engaging with and being responsive to local stakeholders and the local needs of LMI communities, not just applying one-size fits all solutions”; (ii) increasing “the clarity, consistency, and transparency” of CRA supervisory expectations and standards regarding eligible CRA activities and how these activities are evaluated and assessed; and (iii) updating “CRA standards to reflect changes in the business of banking, in particular the increased use of mobile and internet delivery channels”—a business model, Hsu noted, that did not exist when the regulators last updated the CRA regulations. Pointing out that trends and studies have shown that it is insufficient to evaluate a bank’s CRA performance solely on a branch-based model, as banks are increasingly closing branches and focusing on online and mobile banking, Hsu stressed the need to broaden regulators’ evaluation of banks’ CRA performance “to more appropriately reflect the communities the banks serve” in order to fulfill the CRA’s core mission.

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

  • Acting FDIC Chairman Gruenberg outlines priorities

    On February 7, acting FDIC Chairman Martin J. Gruenberg released a statement and summary of the FDIC’s priorities for the coming year. According to Gruenberg, the federal banking agencies intend to act on a notice of proposed rulemaking to strengthen and enhance the Community Reinvestment Act which is the FDIC’s “top priority.” For evaluating crypto-asset risks, Gruenberg noted the need for “robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities.” Additionally, Gruenberg stated that the financial risks of climate change to the financial system will also be a top priority of the FDIC, and that the FDIC’s actions “will include seeking public comment on guidance designed to help banks prudently manage these risks, establishing an FDIC interdivisional, interdisciplinary working group on climate-related financial risks, and joining the international Network of Central Banks and Supervisors for Greening the Financial System.” Other priorities include reviewing the bank merger process and finalizing the Basel III Capital Rule.

    Bank Regulatory Federal Issues FDIC Climate-Related Financial Risks CRA

  • OCC looks at compliance with state laws in CRA evaluations

    On February 2, the OCC issued Bulletin 2022-2 addressing the agency’s processes for considering state banking commissioner input related to the performance of national banks under state community reinvestment laws, as well as state consumer complaint referrals. Among other things, the Bulletin outlines OCC policy and procedures for considering state input on the community reinvestment performance of OCC-supervised banks, including the implementation of Riegle–Neal Interstate Banking and Branching Efficiency Act community reinvestment-related provisions. Noting that several states and the District of Columbia have adopted community reinvestment laws that are similar to the federal Community Reinvestment Act (CRA), the OCC states that it will consider input from state banking commissioners regarding a national bank’s performance under applicable state community reinvestment laws when evaluating the bank’s CRA performance. The Bulletin also provides general guidance related to the OCC’s expectations concerning the handling of consumer complaints that state officials refer to national banks and federal savings associations, as well as state referrals of complaints to the OCC. The Bulletin “reminds banks that the OCC’s exclusive visitorial authority is not a basis for declining to address consumer complaints referred by state or local officials,” and “encourages banks to explain to state officials how complaints were resolved but without compromising consumers’ privacy interests or other confidential information.” Additionally, state officials are encouraged to refer to the OCC complaints alleging violations of federal fair lending laws or illegal, predatory, unfair, or deceptive acts or practices.

    Bulletin 2022-2 rescinds OCC Advisory Letters 99-1 and 2004-2.

    Bank Regulatory Federal Issues Agency Rule-Making & Guidance OCC State Issues CRA Riegle-Neal Act


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