Addressing several criticisms from lawmakers and community groups since the release of the proposed revamp of the Community Reinvestment Act, Comptroller of the Currency Joseph Otting said his agency plans to move forward with or without the Federal Reserve's backing.
There are no plans to budge on the proposal's 60-day comment period, which ends March 9.
The Office of the Comptroller of the Currency (OCC), along with the Federal Deposit Insurance Corp. (FDIC), gave the public 60 days, instead of the usual 90, to comment on their overhaul of the 1977 law meant to curb discrimination against poorer borrowers.
“There are limited ways that the Fed could catch up with us,” Otting said. “So my thought or vision will be we will do a joint OCC-FDIC rule and then the Fed will have to make a determination whether they want to ultimately pick what we've done or modify for the 15% of the banks that they regulate on CRA.”
Under the CRA, banks are evaluated based on a formula that includes loans to homebuyers and small businesses in low- and middle-income areas and the number of branches in so-called assessment areas.
Banks that receive low ratings may be hit with sanctions that can prevent mergers and the opening of new branches.
The OCC and the FDIC oversee about 85% of CRA activity.
Fed Gov. Lael Brainard has criticized several aspects of the OCC-FDIC proposal, which includes combining CRA evaluation into a single, final score based in part on dollar value.
In a speech at the Urban Institute in Washington this month, Brainard said the Fed’s blueprint would emphasize the number of loans banks make in low-income areas rather than the dollar value.
Brainard also suggested the OCC and FDIC’s proposal might be rushed.
"If the past is any guide, major updates to the CRA regulations happen once every few decades. So it is much more important to get reform right than to do it quickly,” she said.
Rep. Maxine Waters, D-CA, chairwoman of the House Financial Services Committee, has called on the OCC and the FDIC to expand the public comment period to 120 days, but Otting said he believes the 60-day window is sufficient, given the advance notice his agency has provided.
“I have spent the last 18 months traveling around the United States interacting with people talking about our strategy,” he said. “We've done five or six tours around the United States. We've met with thousands of nonprofit groups. So it isn't like we gave people a standing start to where we were going. We have been working for 18 months on this and so I think it's plenty of time. We're happy to sit down with anybody that wants to come in [if] they don't understand parts of the proposal and go through it with them.”
Otting is scheduled to testify next week in front of the House Financial Services Committee regarding the proposed CRA revamp.
