Insight

Special Alert | Community Reinvestment Act

FRB, OCC, and FDIC to develop joint CRA rulemaking

Amy S. Matsuo

Amy S. Matsuo

ESG and Regulatory Insights Lead, KPMG LLP

Following completion of a review initiated by Acting Comptroller of the Currency Michael Hsu, the Office of the Comptroller of the Currency (OCC) announced that it will propose rescinding its Community Reinvestment Act (CRA) rule issued in May 2020 and will work with the Federal Reserve Board (FRB or Board) and the Federal Deposit Insurance Corporation (FDIC) to develop a joint rulemaking “that strengthens and modernizes the CRA.”

  • Acting Comptroller Hsu said “The disproportionate impacts of the pandemic on low and moderate income communities, the comments provided on the Board's Advanced Notice of Proposed Rulemaking, and our experience with implementation of the 2020 rule have highlighted the criticality of strengthening the CRA jointly with the Board and FDIC.”
  • OCC states the agencies’ joint proposed rulemaking will build on the FRB’s September 2020 advanced notice of proposed rulemaking (ANPR). At the time of that release, OCC stated that many principles in the FRB ANPR reflect agreement between the FRB, OCC, and FDIC prior to finalization of the OCC rule.
  • The FRB’s ANPR contained 99 questions, including some (such as those that follow) that hint at an opportunity for certain ESG-related activities and/or investments to be eligible for CRA credit:
  • “In considering how the CRA’s history and purpose relate to the nation’s current challenges, what modifications and approaches would strengthen CRA regulatory implementation in addressing ongoing systemic inequity in credit access for minority individuals and communities?”
  • “Should the Board include disaster preparedness and climate resilience as qualifying activities in certain targeted geographies?”
  • Notably, consideration of the CRA as a regulatory framework to promote sustainable finance projects, especially climate resiliency, was the subject of multiple articles published by the Federal Reserve Bank of San Francisco in its Community Development Innovation Review. In addition, the New York Department of Financial Services announced earlier this year that it may provide credit under its own CRA laws to New York State chartered financial institutions engaging in certain climate resiliency activities. (see KPMG Regulatory Alert here)
  • The FRB and FDIC joined the OCC in a statement committing to work together to “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.”

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