FDIC, OCC Issues Joint CRA Proposal

WASHINGTON-The Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint notice of proposed rulemaking last Tuesday to revise reporting and other provisions under the Community Reinvestment Act. The proposal bumps up the size of the institutions permitted under the `small’ bank examination from $250 million to $1 billion in assets, which has less detailed reporting requirements than the `large’ bank exam. It also establishes a new `community development test’ for banks between $250 million but under $1 billion in assets. It would provide greater flexibility to these `intermediate small banks’ than the current large bank test by allowing them to divide their resources for CRA purposes among community development loans, investments and services based on the needs of their community. Also, intermediate small banks would not have to collect and report certain CRA loan data. The agencies specifically asked for the best way to identify underserved rural areas. Comments are due 60 days after publication in the Federal Register. “The proposed changes approved today should provide regulatory relief for community banks, but also preserve and maintain meaningful community development activities by those banks,” a release from the FDIC read. American Bankers Association Executive Vice President Edward Yingling hailed the move by the FDIC and OCC. “Raising the threshold and including a broad community development standard will encourage rural development and help banks address local needs, whether these needs be loans, investments or services,” he said. “However, the ABA will carefully study the effect and relative weights of the lending and community development tests included in the FDIC-OCC proposal.” CUNA was quick to point out that the banks are working to lessen their CRA responsibilities while trying to impose them on credit unions. Associate General Counsel Mary Dunn said CUNA will definitely be analyzing the proposal, noting that previous proposals that have come out of the agencies had “gotten away from the original intent” of the law. [email protected]