Today, the Office of the Comptroller of the Currency (OCC) announced that the agency will halt further implementation of its 2020 Community Reinvestment Act (CRA) rule and will reconsider the rule in its entirety — a necessary first step to reversing the Trump-era changes to the critical anti-redlining law.
Portions of the harmful rule that have not yet been implemented, including how banks will be evaluated under new exams and additional data reporting requirements, will not go into effect as originally scheduled. Other provisions that are already in effect, including the designation of activities eligible for credit under the CRA, require further OCC action.
However, some aspects of the 2020 final rule remain in effect. Of particular concern, banks are currently permitted to receive CRA credit for loans and investments that only partially benefit low- and moderate-income people. For example, the OCC currently allows banks to get CRA credit for large infrastructure projects, like major bridges, that may do little to improve community or economic development or address needs in low- and moderate-income communities.
Last year, the National Community Reinvestment Coalition (NCRC) and the California Reinvestment Coalition (CRC), represented by Democracy Forward and Farella Braun + Martel, filed a lawsuit seeking to block the implementation of the OCC rule, claiming that it violated the Administrative Procedures Act and was finalized without sufficient data to support the revisions. In February 2020, a federal judge rejected the OCC’s attempt to dismiss the lawsuit, a key hurdle in moving the claim forward.
“Today’s announcement is a step in the right direction, but much more needs to be done to create an updated CRA that increases, rather than decreases, financial services, lending and investment in low- and moderate-income communities,” said Jesse Van Tol, CEO of the National Community Reinvestment Coalition. “The 2020 OCC rule, if implemented fully, would have disastrous outcomes for LMI communities. Communities are still reeling from the economic and personal devastation of a pandemic, and a strong CRA is a critical component of a just recovery.”
Today’s announcement also provides an opportunity to move forward with consistent, clear and strong rules developed by all three banking regulators — the OCC, the Federal Reserve and the Federal Deposit Insurance Corporation.
“This is significant for Black, Indigenous, People of Color in California and across the country who fought long and hard against this harmful rule. We’re encouraged by the OCC’s decision, and we will continue to organize to ensure that a new rule is put in place that is not only just, but also race-conscious and begins to dismantle the white supremacy present in our financial system,” said Paulina Gonzalez-Brito, Executive Director of the California Reinvestment Coalition.
The OCC action today followed the appointment of Michael Hsu as Acting Comptroller early last week.
“We are pleased that the administration has taken this important first step,” said Michael Martinez, Managing Senior Counsel at Democracy Forward. “In 2020, the Trump administration unlawfully weakened the measures meant to protect communities of color from the discriminatory practice of redlining amid a pandemic, the ensuing economic downturn, and urgent calls for racial justice. We will continue our work to ensure the OCC is held accountable and follows the law.”
The National Community Reinvestment Coalition and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business. NCRC was formed in 1990 by national, regional and local organizations to increase the flow of private capital into traditionally underserved communities. NCRC has grown into an association of more than 600 community-based organizations in 42 states that promote access to basic banking services, affordable housing, entrepreneurship, job creation and vibrant communities for America’s working families. More: www.ncrc.org
The California Reinvestment Coalition (CRC) is the largest statewide community reinvestment coalition in the country, with over 300 member organizations across California that provide services to tens of thousands of Californians. CRC members include affordable housing developers, community development financial institutions, housing counseling agencies, small business technical assistance providers, legal services agencies, and community-based organizations.
About Democracy Forward
Democracy Forward is a nonprofit legal organization that represents organizations, individuals, and municipalities in impact litigation to keep corruption out of policymaking.
Megan J. Uzzell