Loans

OCC’s Hsu: ‘Loans must go up’ under new CRA rules


Michael Hsu, acting director of the U.S. Office of the Comptroller of the Currency, said Friday that final rules for the Community Reinvestment Act, due to be released on Tuesday, aim to increase bank lending and investment in underserved communities.

Bloomberg News

WASHINGTON — Acting Comptroller of the Currency Michael Hsu said Friday that the largest banks will bear the heaviest burden in upcoming Community Reinvestment Act implementation rules from the Federal Deposit Insurance Corporation, the Federal Reserve and the Comptroller of the Currency that seek to expand Bank loans and investments in underserved communities.

“It’s a long rule — don’t print it all out at once, you’ll run out of ink,” Hsu said at the annual meeting of the National Bankers Association, which represents minority depository institutions. “Level, it has to be more, better, Faster. In very simple terms, this is it: The number of CRA investments and loans must increase.”

Xu said long awaited rulesThe rule, which the FDIC board of directors and the Federal Reserve will vote on Tuesday at a public meeting, is intended to provide a greater understanding of the various challenges communities face and allow the CRA’s activities to target the most pressing needs of local communities. There will also be efforts to streamline the process for determining whether certain lending activities and investments qualify for CRA credit.

“It has to be better and more targeted,” Xu said. “Not every place is equal, one method doesn’t fit all. So it has to be better adapted to these situations. And it has to be faster.” “We can” “not sit there and try to make a lot of different decisions on a bunch of different things. So we try to do that across the board.”

Hsu added that the final rule takes into account the compliance burden associated with the proposed changes and the limited ability of smaller banks, including minority depository institutions and community development financial institutions, to meet higher compliance costs.

“We received a lot of comments on this,” Xu said. “The biggest burden of data and changes is really on the largest banks. So for smaller banks, we did adjust our expectations. For MDIs, CDFIs and others , we’re trying to stop them. I can’t give any details, stay tuned and read it on Tuesday, but we’re very excited about it.”

The Community Reinvestment Act, passed in 1977, requires banks to provide credit, investments, and services to all communities within their service areas, not just the most affluent and therefore profitable communities. But the CRA’s definition of service area has traditionally been consistent with banks’ branch networks still existing even as more banking services are conducted digitally.Banks and community groups have Already agreed Every aspect of the CRA’s implementing rules is outdated.

Former Comptroller of the Currency Joseph Otting pushes for CRA reform The centerpiece of his tenure During Trump’s administration, he encountered opposition from all sides community advocacy organization and Supervisors go togetherThe Federal Reserve, FDIC, and OCC issued revised CRA implementation rules in May 2022: first encounter Received positive feedback from banks and community organizations, although the bank has since cooling in measures.

In separate remarks at a National Bankers Association event on Friday, FDIC Chairman Martin Gruenberg emphasized that a core aspect of the reform is to decouple CRA activities from communities where banks only have physical branches. As stated in last year’s notice of proposed rulemaking, banks providing loans will need activity above a certain threshold to meet CRA obligations regardless of whether the CRA has physical branches in those communities.

“If loans made in communities where banks have no physical presence are not subject to CRA assessment, then over time the CRA’s relevance to the U.S. banking market will increase and ensure banks serve all communities,” Gruberg said. : “As proposed by NPR, a central element of this rulemaking would be to expand the CRA’s assessment of banks regardless of whether they [they] Have a physical presence in the community. ”





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