WASHINGTON–An announcement by the Office of the Comptroller of the Currency that it is reviewing and rethinking Community Reinvestment Act (CRA) rules put in place during the last days of the Trump Administration was the subject of numerous questions during a House hearing.
During the hearing titled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions,” Michael Hsu, acting Comptroller of the Currency, fielded numerous questions related to the decision, with Democrats on the panel supporting the decision to review the CRA changes, and Republicans on the panel criticizing the move.
Late in 2020, the OCC published a final rule overhauling 1977’s CRA.
"The OCC's actions will provide for an orderly reconsideration of the June 2020 rule and provide banks with more flexibility to deploy resources in response to the COVID-19 pandemic," the OCC said in a statement. "These actions also provide the OCC with the opportunity to consider additional stakeholder input, to evaluate issues and questions that have been raised, to reassess the necessary data, and to take additional regulatory action, as appropriate."
‘Pending Matters’
Hsu told the committee that when he took office the OCC “identified several pending matters I thought were ripe for review. On CRA, due to the effect of the pandemic and other issues, we had enough information to say does it seem like the right time to consider where we are. It’s now under review. We want to take all the facts and perspectives into account before deciding what to do.”
Hsu declined to provide any indication of what might ultimately come out of the review.
Four Priorities
Separately, Hsu told the committee he has four other priorities as the acting Comptroller:
- Guarding Against Complacency. “Overconfidence leads to complacency and complacency leads to risk.”
- Reducing Inequality. “Reducing inequality must be a national priority,” he said. “The pandemic has had disproportionate impact on minority groups and pandemic threatens they will be left behind. We must work to strengthen regulations to implement the CRA. Predatory lending has no place in our national banking system.”
- Collectively Adapt to the Digitization of Banking and Finance. “I am concerned the regulatory community is taking a fragmented agency by agency approach to the technological changes taking place today. With regards to charters, some are concerned extending charters to fintechs extends benefits of banking without the responsibilities. We must find a way fintech banking platforms can fit into the banking system.”
- Climate Change. “We must act on climate change. The OCC can help by taking two-prong approach. We must engage with and learn from others. We must support development and adoption of effective climate management practices at banks. I have asked staff to develop concrete actions to be taken. We will be active in this space.”