Home Banking OCC enters new section of CRA reform with scoring proposal

OCC enters new section of CRA reform with scoring proposal


WASHINGTON — The Workplace of the Comptroller of the Foreign money issued a long-awaited proposal on Neighborhood Reinvestment Act scoring, however stated the company nonetheless wants extra information from banks earlier than the brand new framework is full.

The proposal unveiled Tuesday, which accompanies broader CRA reforms finalized in Could first proposed by former Comptroller Joseph Otting, stops in need of offering concrete scoring requirements that the company says will in the end make the CRA course of extra goal for banks. Relatively, the OCC introduced plans to require banks to submit extra information about their CRA exercise to assist inform the scorecard.

The purpose of the brand new scoring requirements in the end is to ascertain minimal benchmarks for “passable” and “excellent” rankings on sure facets of the CRA examination.

“As soon as the OCC analyzes the general public feedback on this proposal and the info it receives,” the company wrote in its proposed rule, “the OCC plans to challenge a remaining rule that may undertake an strategy for setting the benchmark, threshold, and minimal values that correspond to the presumptive rankings … for banks assessed beneath the final efficiency requirements.”

The OCC appeared to make key commitments aimed at appeasing critics who claim that the new CRA regime will make it far easier for banks to pass their CRA exams.

The OCC appeared to make key commitments aimed toward appeasing critics who declare that the brand new CRA regime will make it far simpler for banks to go their CRA exams.

Bloomberg Information

On the identical time, the OCC appeared to make key commitments aimed toward appeasing critics who declare that the brand new CRA regime will make it far simpler for banks to go their CRA exams. For instance, the proposal stated the scoring methodology is not going to result in grade inflation in comparison with previous exams.

“[T]he OCC is proposing to ascertain benchmarks, thresholds, and minimums that correspond to a proportion of banks that will have obtained a hypothetical bank-level presumptive CRA ranking of excellent and passable that’s no higher than the historic proportion of banks which have obtained a bank-level assigned CRA ranking of excellent and passable,” the proposal stated.

The OCC additionally proposed a brand new requirement that will scrutinize a financial institution’s CRA efficiency beneath the brand new framework in opposition to its personal historic CRA information.

If the OCC finds a decline of 10% or higher between banks’ historic efficiency and precise efficiency beneath the brand new regime that “can’t be defined by market situations or different components,” the company wrote in its proposal, regulators would contemplate a “downward adjustment in figuring out the financial institution’s assigned ranking.”

The OCC went out by itself to finalize the broader CRA reform rule in Could, because the Federal Deposit Insurance coverage Corp. and Federal Reserve Board declined to assist the regulation. The Fed launched its personal CRA reform define and plenty of stakeholders have held out hope that the three companies in the end will formulate a joint plan.

The election of Joe Biden as president additionally casts uncertainty over the management of the OCC. If the incoming administration tries to switch performing Comptroller Brian Brooks, who’s the Trump administration’s nominee for the permanent job, it could lead on the company to start out over on CRA reform.

The OCC’s scoring requirements can be decided by the info the OCC receives by means of a forthcoming obligatory Data Assortment Survey, or ICS, which is able to make clear banks’ CRA-related information.

In keeping with Tuesday’s proposed rule, the OCC stated it might request 4 discrete forms of financial institution information in its survey.

The primary sort would deal with nationwide banks’ “presence,” together with information on banks’ important workplaces, financial institution branches and different deposit taking services. The second sort of knowledge would come with the “quantified greenback worth of banks’ CRA qualifying actions,” which can be processed beneath the framework the OCC finalized in Could.

The third sort of knowledge would deal with retail mortgage purposes relative to banks’ CRA qualifying mortgage originations.

The fourth and remaining sort requests geographic information exhibiting how banks have distributed their branches in low-to-moderate revenue areas in comparison with higher-income areas.


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