The OCC is currently taking comments on proposed guidance intended to simplify how banks use the strategic plan option for their Community Reinvestment Act (CRA) performance evaluations. The OCC is proposing benchmarks for loans and investments that the OCC would consider as Satisfactory or Outstanding levels of community development financing. The OCC is setting the bar far too low which could result in significant declines in bank financing devoted to affordable housing, community development financial institutions (CDFIs), and economic revitalization.
Comments on the OCC’s proposed strategic plan guidance are due February 20th.Â
The OCC is proposing that as little as .12% to .24% of assets dedicated to community development loans and investments per year is enough to pass CRA exams, which is well below current levels. NCRC analyzed data released by the Federal Reserve, the most comprehensive public database of CRA exam results, and found that the median of annual community development loans and investments was .7% of assets for OCC regulated banks below $30 billion in assets, and .64% for banks below $1 billion, from 2016 through 2020.
If already in place, community development financing would have decreased by nearly $100 million a year if just 10% of OCC-regulated banks near median performance dropped down to .24% of assets, resulting in a billion dollars less over a decade. Significantly more community development financing would be at risk if more banks decide to opt into strategic plan goals using the OCC’s weak benchmarks. Banks that do not pursue strategic plans may also point to this guidance to justify decreasing their community development financing.
The OCC offers no improvements to the outdated process for gathering public input on strategic plans. Currently, banks are only required to post notices about draft strategic plans in newspapers before the plan is finalized. These notices are largely placed in trade papers that are not widely read by the public and nonprofit organizations active in community development, resulting in minimal opportunities for stakeholders to weigh in on how banks will serve their communities.  The OCC could post draft plans on its website and encourage banks to post draft strategic plans online to better facilitate public participation. The lack of attention to such an obviously outdated way of gathering public input indicates that community involvement in the development of strategic plans is not a priority for the OCC.
NCRC is happy to help your organization with preparing your own comment letter to push back on this harmful proposal. Click here for the full proposal and instructions on how to submit comments.Â
Please contact Kevin Hill at khill@ncrc.org for more information.
