(July 23, 2021) New regulations on anti-redlining rules will be rescinded, and federal banking agencies vowed to work together to develop a new proposal, the agencies announced this week.
On Tuesday, the OCC announced that it would propose rescinding its Community Reinvestment Act (CRA) rule adopted in 2020. Acting Comptroller Michael J. Hsu said a review he started shortly after taking office in early May led to his decision to make the proposal. However, he indicated strengthening and modernizing the CRA rules – which implement 1970s legislation designed to thwart redlining in lending by banks – was necessary to ensure fairness during “persistent and rising inequality and changes in banking.”
The June 2020 rule was finalized by the OCC alone; neither the Federal Reserve Board nor the FDIC was party to that action, and the final OCC rule received a lackluster response from the banking industry. Meanwhile, the Fed issued its own advance notice of proposed rulemaking (ANPR) on modernizing CRA rules in September 2020, with a 120-day comment period. The notice was issued on a 5-0 vote by the Fed board.
This week, following OCC’s action, the OCC, Fed and FDIC issued a joint statement that they want to work together to jointly strengthen CRA rules. “Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods,” the agencies stated.