October 20, 2020

Crapo Floor Statement on Community Reinvestment Act

“Mr. President, I rise to oppose the resolution vacating the OCC’s final rule on the Community Reinvestment Act (CRA).  

“Acting Comptroller of the Currency Brian Brooks has noted, ‘The new Community Reinvestment Act rule was finalized for one reason – to promote more lending and investment in underserved areas – including low- and moderate-income neighborhoods.’ 

“The new rule includes several key changes. It clarifies what counts for CRA credit; updates where activity is evaluated; evaluates CRA performance more objectively; and makes recordkeeping and reporting timelier and more transparent. 

“The OCC’s efforts to improve the CRA framework began in December 2017 with an extensive and deliberate process, engaging numerous stakeholders along the way. The OCC issued its Advanced Notice of Proposed Rulemaking in 2018, and in December 2019, the OCC jointly issued a proposed rule with the FDIC, which received 7,500 comments. The OCC says those comments made it better and significantly different from the proposal. 

“The status quo was failing. The OCC found that the regulatory status quo had failed to improve economic outcomes for underserved groups, including minorities and low- and moderate-income communities. 

“The CRA regulatory process was broken.  Acting Comptroller Brooks has stated, 

‘In addition to not achieving the societal goals of the statute, the regulatory process around CRA was broken. Banks and stakeholders were uncertain of what activities would qualify for CRA consideration from exam to exam. The framework’s lack of objectivity, transparency, consistency, and fairness left the whole process open to sweetheart deals and made it nearly impossible to assess the impact of billions of dollars that were spent each year. Stakeholders have voiced the need to update CRA regulations for more than a decade….’ 

“What does the final rule do?  The final rule establishes objective criteria for determining – and an illustrative list of – what qualifies for CRA credit while also creating a pre-approval process for banks. 

“It updates and expands assessment areas to better reflect how banks serve customers today by adding deposit-based assessment areas.   

“It also incentivizes CRA activity in new areas of need, including Indian Country and rural and distressed areas. 

“The final rule establishes new general performance standards to more objectively evaluate a bank’s CRA performance. 

“Finally, the rule requires banks to report better data to improve the transparency and accountability of banks and their regulators to their communities. 

“Importantly, the rule does not change the OCC’s authority or obligation to fight discrimination and illegal practices. 

“Several organizations have praised the final rule, including: the Consumer Bankers Association; the National Disability Institute; the National Congress of American Indians; and the National Diversity Coalition. 

“FDIC Chairman McWilliams has noted, ‘There are many provisions in the final rule that will greatly benefit low- and moderate-income communities, and provide greater clarity to banks on CRA expectations.’ 

“Last month, the Federal Reserve issued its own Advance Notice of Proposed Rulemaking. Acting Comptroller Brooks observed, ‘There’s a significant amount of overlap between what the Fed has proposed and what the OCC has finalized.’ 

“The OCC issued this rule in May. Senate Democrats have waited until the end of the Congressional Review Act window to act, timing this vote to be most disruptive to the Senate’s floor schedule. More importantly, this vote comes after the rule’s effective date of October 1. Voiding it would create confusion and uncertainty for communities, industry, and other stakeholders, harming the very communities the CRA would help. 

“Acting Comptroller Brooks said it well:

‘Overturning the OCC’s new CRA rule would roll back benefits to Native Americans, people with disabilities, American farmers, and small business owners. It would preserve a status quo that on its face has failed to make the progress promised 43 years ago. It would force banks, community groups, and examiners to operate in the dark without the transparency, objectivity, and regulatory certainty that the new rule provides. It would also prevent future Comptrollers from taking up the rule to improve how CRA works in the future.' 

“Additionally, former Comptroller Joseph Otting wrote, ‘…The coronavirus pandemic has only made it more dire that communities – particularly low- and moderate-income communities – need more capital and better access to credit. And they need it now.’ 

“I urge my colleagues to join me in voting against this resolution, to preserve this important modernization of the CRA regulations.”