Examiners would weigh lending over branch count under proposed rules
The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation on Friday jointly proposed the first major overhaul of the Community Reinvestment Act’s rules in nearly three decades. Among the proposed changes is most notably a reduction in the number of banks that would need to fully comply with the law.
The Community Reinvestment Act is a law enacted during the Civil Rights era that requires federal regulators to assess how well banks serve low-to-middle income neighborhoods. The proposed overhaul would be the first major revision of the law’s implementing rules and regulations in nearly three decades.
Under the current framework, bank compliance is evaluated in part on physical presence — the number of branches a bank operates in a community and the deposits it collects locally. The proposed revisions would shift that emphasis toward actual lending activity. Examiners under the new rules would put more weight on the lending banks do in certain communities and geographies, and less on how many branches they open or how much in deposits they take in from a local community.