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  • OCC formally rescinds CRA rule

    Agency Rule-Making & Guidance

    On December 14, the OCC issued a final rule rescinding its 2020 Community Reinvestment Act Rule (2020 Rule) and replacing it with a rule based largely on the prior rules adopted jointly by the federal banking agencies in 1995, as amended (1995 Rules). (See also OCC Bulletin 2021-16.) According to the OCC, the “action is intended to facilitate the ongoing interagency work to modernize the CRA regulatory framework and promote consistency for all insured depository institutions.” As previously covered by a Buckley Special Alert, the 2020 Rule was intended to modernize the regulatory framework implementing the CRA and provided for at least a 27-month transition period for compliance based on a bank’s size and business model, among other things.

    In September, the OCC solicited comments on a proposal to rescind the 2020 Rule (NPRM) and issued a series of frequently asked questions discussing the rulemaking process and providing a general timeline on the transition from the 2020 Rule (covered by InfoBytes here and here). The FAQs addressed questions including concerns related to the transition period for tracking activities that qualify under the 2020 Rule but would not qualify should the 1995 Rules be reinstated. The OCC announced that after reviewing transition issue comments received on the NPRM, the final rule had been adopted largely without modification. The final rule carries a compliance date of January 1, 2022, for all national banks and federal and state savings associations, with the exception of the final rule’s public file and public notice provisions, which have a delayed compliance date of April 1, 2022. According to the OCC, transitioning back to the 1995 Rules should carry a limited burden as the June 2020 Rule had only been partially implemented.

    The OCC further noted that “strategic plans approved under the June 2020 Rule may remain in effect” but that “these plans must comply with the provisions of the final rule, as applicable.” Also, since the final rule stipulates that a bank’s record of helping to meet the credit needs of its assessment area(s) will be taken into consideration, “provisions in strategic plans that include goals for activities outside a bank’s assessment area(s) will no longer be applicable, and the OCC will no longer evaluate these activities when assessing the bank’s performance.” Additionally, the OCC stated that the new rule is intended to limit the CRA burden on banks, bank communities, and examiners while ensuring that insured depository institutions can “meet the credit needs of their entire communities, including low- and moderate-income [] neighborhoods,” consistent with safe and sound operations.

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

  • NYDFS proposes expanding CRA to support minority- and women-owned businesses

    State Issues

    On November 3, NYDFS issued proposed changes to the state’s Community Reinvestment Act (New York CRA) to guarantee the department “has the necessary data to ensure banks are evolving to best serve their communities and protect against redlining and fair lending violations.” The proposed regulation further specifies the type of communities the New York CRA plans to support and will enable NYDFS to evaluate the extent to which minority- and women-owned businesses are offered and provided credit. In June 2020, NYDFS issued an industry letter (covered by InfoBytes here) to alert regulated entities that it planned to make changes to its CRA examination process in response to an amendment to the New York CRA, which required NYDFS to consider “several aspects of banking institutions’ activities with respect to minority- and women-owned businesses.” Among other things, the proposed regulation outlines data collection and submission requirements, including (i) asking whether a business applying for a loan or credit is minority- or women-owned or both; (ii) reporting application details such as the date, type of credit applied for and amount, and whether the application was approved or denied; and (iii) reporting a business’s size and location. Comments will be accepted for 60 days following publication in the State Register.

    The New York CRA has undergone several expansions recently. As previously covered by InfoBytes, the New York governor signed legislation on November 1 expanding the New York CRA to cover non-depository lenders. Under the amendments, nonbank mortgage providers’ lending and investment in low- and moderate-income communities will be subject to NYDFS review. 

    State Issues State Regulators NYDFS Bank Regulatory CRA New York

  • New York expands CRA requirements to non-depository mortgage lenders

    State Issues

    On November 1, the New York governor signed S5246A, which expands the New York Community Reinvestment Act (New York CRA) to cover non-depository lenders. Under the act, nonbank mortgage providers’ lending and investment in low- and moderate-income communities will be subject to NYDFS review. The anti-redlining law—which previously only measured banks’ activities in low- to moderate-income communities—is intended to “ensure everyone has fair and equal access to lending options in their pursuit of purchasing a home, especially in communities of color which continue to be impacted by the effects of the pandemic and have historically faced many more hurdles when seeking a mortgage,” Governor Kathy Hochul stated. The act follows a report issued by NYDFS in February, which examined redlining in the Buffalo metropolitan area and concluded that there is a “distinct lack of lending by mortgage lenders, particularly non-depository lenders” to majority-minority populations and to minority homebuyers in general. (Covered by InfoBytes here.) At the time, the report made numerous recommendations, including a recommendation to amend the New York CRA to cover nonbank mortgage lenders and a request that the OCC and the CFPB investigate federally regulated institutions serving the Buffalo area for violations of fair lending laws. The act takes effect in a year.

    State Issues State Regulators NYDFS Bank Regulatory CRA Non-Depository Institution Nonbank Redlining New York

  • FDIC releases September enforcement actions

    Federal Issues

    On October 29, the FDIC released a list of administrative enforcement actions taken against banks and individuals in September. During the month, the FDIC made public six orders consisting of “one Consent Order, two terminations of Consent Orders, one Order to Pay Civil Money Penalty, one Order Terminating Decision and Order to Cease and Desist, and one Order of Termination of Insurance.” Among the orders is an order to pay a civil money penalty imposed against a Nebraska-based bank related to alleged violations of the Flood Disaster Protection Act. Among other things, the FDIC claimed that the bank “[m]ade, increased, extended, or renewed loans secured by a building or mobile home located or to be located in a special flood hazard area without requiring that the collateral be covered by flood insurance,” and also allegedly “[f]ailed to comply with proper procedures for force-placing flood insurance in instances where the collateral was not covered by flood insurance at some time during the term of the loan.” The order requires the payment of a $24,000 civil money penalty.

    The FDIC also issued a consent order to a Utah-based bank, which requires the bank to take measures to correct current alleged violations (and prevent future violations) of TILA, RESPA, E-Sign Act, ECOA, CRA, and TISA, as well as the statutes’ implementing regulations. The bank neither admitted nor denied the alleged violations but agreed to, among other things, develop a sound risk-based compliance program and implement an effective training program to ensure compliance.

    Federal Issues FDIC Enforcement Bank Regulatory Flood Disaster Protection Act TILA RESPA E-SIGN Act ECOA CRA Truth in Savings Act

  • OCC releases FAQs on proposal to rescind 2020 CRA rule

    Agency Rule-Making & Guidance

    On October 26, the OCC issued responses to frequently asked questions on its notice of proposed rulemaking (NPRM) to rescind its 2020 Community Reinvestment Act Rule (2020 Rule) and to replace it with rules based largely on those adopted jointly by the federal banking agencies in 1995, as amended. As previously covered by InfoBytes, the OCC noted it intends to align the agency’s CRA rules with current Federal Reserve Board and FDIC rules, “thereby facilitat[ing] the on-going interagency work to modernize the CRA regulatory framework and create consistency for all insured depository institutions.” The FAQs discuss the rulemaking process and provide a general timeline on the transition from the 2020 Rule. The FAQs also answer questions concerning: (i) CRA bank-type determinations; (ii) qualifying activity determinations; (iii) the qualifying activity confirmation request system; (iv) the transition period for tracking activities that qualify under the 2020 Rule but would not qualify should the 1995 rules be reinstated; (v) examination administration; (vii) assessment areas; (vii) targeted geographic areas; (viii) strategic plans; and (ix) submitting public comments.

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

  • OCC releases bank supervision operating plan for FY 2022

    Federal Issues

    On October 15, the OCC’s Committee on Bank Supervision released its bank supervision operating plan for fiscal year 2022. The plan outlines the agency’s supervision priorities and highlights several supervisory focus areas including: (i) strategic and operational planning; (ii) credit risk management, including allowances for loan and lease losses and credit losses; (iii) cybersecurity and operational resiliency; (iv) third-party oversight; (v) Bank Secrecy Act/anti-money laundering compliance; (vi) consumer compliance management systems and fair lending risk assessments; (vii) Community Reinvestment Act performance; (viii) LIBOR phase-out preparations; (ix) payment systems products and services; (x) fintech partnerships involving potential cryptocurrency-related activities and other services; and (xi) climate-change risk management. The plan will be used by OCC staff members to guide the development of supervisory strategies for individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers.

    The OCC will provide updates about these priorities in its Semiannual Risk Perspective, as InfoBytes has previously covered.

    Federal Issues OCC Supervision Bank Regulatory Third-Party Third-Party Risk Management Risk Management Bank Secrecy Act Anti-Money Laundering Fair Lending CRA Fintech Climate-Related Financial Risks

  • Fed joins Central Bank Network for Indigenous Inclusion

    Federal Issues

    On October 13, Federal Reserve Governor Lael Brainard announced that the Fed has joined the Central Bank Network for Indigenous Inclusion to foster continuing dialogue, research, and education and increase awareness of economic and financial issues and opportunities for Indigenous economies. The same day, Brainard spoke at Fed Listens: Roundtable with Oklahoma Tribal Leaders in Oklahoma City, Oklahoma, to discuss how the economic disparities experienced by tribal nations were exacerbated by the Covid-19 pandemic. She noted that in an effort to overcome such disparities, it will be important to identify and address barriers to financial inclusion. In addition, Brainard discussed how the Fed has a role to play in supporting economic growth and financial inclusion in Native communities, and that the Fed is collaborating with the other banking agencies to propose Community Reinvestment Act reforms that would increase financial inclusion and the availability of community development financing in underserved communities.

    Federal Issues Federal Reserve Diversity Covid-19 CRA Bank Regulatory

  • OCC proposes rescinding its 2020 CRA rule

    Agency Rule-Making & Guidance

    On September 8, the OCC announced in the Federal Register that it is soliciting comments on a proposal to rescind its 2020 Community Reinvestment Act Rule and to replace it with rules based largely on those adopted jointly by the Federal banking agencies in 1995, as amended. As previously covered by a Buckley Special Alert, the final rule, issued in May 2020, provides for at least a 27-month transition period for compliance based on a bank’s size and business model, among other things. According to the OCC, the proposal, “would align the OCC’s CRA rules with the current Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation rules and thereby facilitate the on-going interagency work to modernize the CRA regulatory framework and create consistency for all insured depository institutions.” Since many aspects of the CRA 2020 rule remain in transition and have not been implemented, the OCC anticipates that the proposed rule will have a limited impact on national banks and savings associations. According to Acting Comptroller Michael J. Hsu, the issuance “is an important step toward strengthening and modernizing the CRA,” and that the agency “is committed to working with the Federal Reserve and FDIC on a future joint rulemaking.” According to the OCC, the proposed rules would apply to all national banks and all federal and state savings associations. Comments are due by October 29.

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

  • Agencies provide guidance on Hurricane Ida and California wildfires

    Federal Issues

    Recently, the FDIC, Federal Reserve Board, NCUA, OCC, and the Conference of State Bank Supervisors issued joint statements covering supervisory practices for financial institutions affected by Hurricane Ida and the California wildfires (see here and here). Among other things, the agencies informed institutions facing operational challenges that the regulators will expedite requests for temporary facilities, noting that in most cases, “a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter.” The agencies also called on financial institutions to “work constructively” with affected borrowers, noting that “prudent efforts” to adjust or alter loan terms in affected areas “should not be subject to examiner criticism.” Institutions facing difficulties in complying with any publishing and reporting requirements should contact their primary federal and/or state regulator. Additionally, the agencies noted that institutions may receive Community Reinvestment Act consideration for community development loans, investments, and services that revitalize or stabilize federally designated disaster areas. Institutions are also encouraged to monitor municipal securities and loans impacted by Hurricane Ida and the California wildfires.

    Federal Issues FDIC Federal Reserve OCC CSBS State Issues Disaster Relief CRA Bank Supervision Bank Regulatory

  • FDIC announces Tennessee disaster relief

    Federal Issues

    On August 26, the FDIC issued FIL-58-2021 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Tennessee affected by severe storms and flooding. The FDIC acknowledged the unusual circumstances faced by institutions affected by the storms and suggested 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 noted 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 regulatory relief from certain filing and publishing requirements.

    Federal Issues FDIC Tennessee Disaster Relief Consumer Finance CRA Bank Regulatory

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