AmBA Asks OCC to Minimize Burden on Banks During CRA Regulatory Transition

November 1, 2021

AmBA urged the OCC on Friday to minimize the burden and confusion for banks that would result if the agency were to rescind its 2020 Community Reinvestment Act rule and replace it with rules the agency adopted jointly with the Federal Reserve and the FDIC in 1995. ABA also submitted a separate joint letter with several financial trade groups to the OCC, echoing similar concerns.

In its comment letter to the OCC, ABA thanked the agency for acknowledging the challenges associated with the 2020 rule. The association also cautioned that banks have already implemented some of the provisions from the 2020 rule and that reverting entirely back to the 1995 rule temporarily would be “disruptive and wasteful, particularly since banks will still need to implement a future interagency rule.”

The association also urged the OCC to maintain the 2020 rule’s size thresholds until an interagency rule is issued. Community banks have limited staff and are acutely affected by regulatory change, ABA wrote, adding that temporarily reverting to the 1995 rule’s asset classifications and reporting requirements “would subject many community banks to unnecessary regulatory churn.”

ABA also recommended that the OCC allow banks to continue using the qualifying activities definitions under the 2020 rule for their strategic plan goals. The scope of the 1995 rule is narrower than activities recognized in the 2020 rule and that could make it difficult for banks to meet strategic plan goals, resulting in a lower CRA rating and possibly harming the reputation of the bank, ABA said. Both letters were supportive of the creation of a single harmonized CRA rule between the federal banking regulators. Read ABA's letter. Read the joint letter.

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