FEDERAL GOVERNMENT RELATIONS
OCC Issues Much-Anticipated Proposal on CRA Performance Standards
The Office of the Comptroller of the Currency on Tuesday proposed its approach to determining Community Reinvestment Act evaluation measure benchmarks, retail lending distribution test thresholds and community development minimums under the new general performance standards outlined in the CRA final rule issued earlier this year.
In a notice of proposed rulemaking, the OCC indicated it intends to issue an information collection survey to obtain bank-specific information from institutions subject to the general performance standards. The agency will use this information to help calculate CRA evaluation measures and CD minimum calculations for each bank’s assessment areas, as well as a bank-level CRA evaluation measure and CD minimum calculations for each bank, among other provisions. The CRA evaluation measure would involve six different benchmark values (one at the bank level and one at the assessment area level for “needs to improve,” “satisfactory” and “outstanding” presumptive ratings, respectively), while the CD minimum would involve two values, one at the bank level and one at the assessment area level.
The proposal also addresses how the OCC will address declines in CRA performance following the initial establishment of benchmarks, thresholds and minimums. Institutions that see their performance “precipitously [decrease] by ten percent or more on the general performance standards … without an adequate explanation under the performance context criteria, including consideration of market conditions, risk having their assigned ratings adversely impacted,” the OCC wrote.
Federal Judge Denies Request to Postpone Release of PPP, EIDL Borrower Data
A federal judge on Tuesday denied a request from the Small Business Administration to postpone the release of borrower information for the Paycheck Protection Program and Economic Injury Disaster Loans. As a result, unless SBA appeals and wins a further delay, the agency must release the name, address and precise loan amount for borrowers who received aid through these programs on or before Dec. 1.
Earlier this year, SBA released less-specific information about PPP loans to protect the personal financial information of borrowers and their employees. For loans totaling $150,000 and higher, SBA released the names and addresses of borrowers but provided a range for loan totals; for smaller loans, it released the exact amount and name of the lender, but not the identity of the borrower.
OCC Finalizes Changes to Rules on Bank Activities, Operations
The Office of the Comptroller of the Currency on Monday finalized changes to its rules for national bank and federal savings association activities, operations and corporate governance to ensure that they can continue meeting the shifting needs of consumers, businesses and communities. The changes will take effect April 1, 2021.
The final rule makes a number of changes to update, streamline or clarify: existing rules related to permissible derivatives activities for national banks; the ability of national banks and federal thrifts to engage in certain tax equity finance transactions; and national bank and thrift membership in payments systems.
The final rule also: expands the ability of national banks and federal savings associations to choose corporate governance provisions under state law; clarifies the extent to which national banks may adopt anti-takeover provisions permissible under state corporate governance law; offers clarity regarding financial literacy programs; codifies interpretations of the National Bank Act relating to capital stock issuances and repurchases; and addresses the application of rules related to finder activities, indemnification, equity kickers, postal services, independent undertakings, and hours and closings to federal savings associations.
Fed Provides Temporary Relief to Community Banks With Pandemic-Inflated Assets
The federal banking agencies last Friday issued an interim final rule to ease the regulatory burden of community banks that have experienced sudden asset growth as a result of participation in COVID-19 relief programs such as the Paycheck Protection Program. The Fed noted that many community banks have experienced an unexpected and sharp increase in assets, swelling their balance sheets, in some cases by more than 25%, but that growth is expected to be temporary.
The rule gives community banks with less than $10 billion in assets as of Dec. 31, 2019, more time to either reduce their balance sheets by shedding temporary growth or to prepare for higher regulatory and reporting standards. According to the rule, asset growth in 2020 or 2021 will not trigger new regulatory requirements for those community banking organizations until Jan. 1, 2022, at the earliest. The rule does not provide relief from Consumer Financial Protection Bureau regulatory and supervisory thresholds, nor does it affect compliance with the Volcker Rule.
OCC Proposes Rule to Ensure Fair Access to Banking Services
The Office of the Comptroller of the Currency last Friday proposed a rule stating that banks should provide access to services, capital and credit based on their risk assessment of individual customers and not make broad-based decisions that affect whole categories or classes of customers. This proposed rule would prohibit covered national banks and federal savings associations – generally, those with $100 billion or more in assets – from denying services in an effort to disadvantage or otherwise hinder the customer from competing in a market or business segment, or to benefit another person or business activity. National banks with less than $100 billion in total consolidated assets are presumed to be outside the scope of the proposed rule.
The OCC indicated that the proposal came in response to decisions from some banks to stop financing specific kinds of businesses, such as gun manufacturers, fossil fuel companies and private prisons. It implements language included in Title III of Dodd-Frank, which charged the OCC with “assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction.”
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.