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CRA Update: Will the Agencies End Up Going It Alone?

By: Danny Gassaway on November 6th, 2019

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CRA Update: Will the Agencies End Up Going It Alone?

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According to FDIC Chairman Jelena McWilliams, there is a chance that the agencies will end up not reaching an agreement on CRA modernization. We catch you up on what she means and what could end up happening.

It’s hard to reach a consensus, especially among bank regulators with different governance structures and approaches.

That’s the message FDIC Chairman Jelena McWilliams shared regarding Community Reinvestment Act (CRA) modernization in recent remarks reported by American Banker.

In early October, Comptroller of the Currency Joseph Otting said he was hopeful that a joint CRA modernization proposal would be issued on an interagency basis this fall. The OCC has lead the charge on CRA reform, announcing an Advanced Notice of Proposed Rulemaking (ANPR) for Community Reinvestment Act updates without the other federal banking regulatory agencies in August 2018—an unusual step suggesting the agencies were having issues reaching agreement. 

Yet it’s still entirely possible that each agency will issue its own rules, according to McWilliams.

"My hope again is to move together on the proposal, but we’re willing to go as three agencies, two agencies, one agency, whatever the end outcome is," McWilliams said in a Q&A in mid-October.

Agency Differences

McWilliams noted that both the Fed and the FDIC have boards, while the OCC’s Otting doesn’t have to answer to a board, making it easier for the OCC to move quicker. The Fed is also known for being “deliberative,” she noted.

While all the regulators have stated a preference for working together, there has been talk of moving forward alone if necessary.

At a February meeting of Women in Housing and Finance, Otting stated, “My preference 110% is to be able to do things jointly... I have a responsibility to the banks which we regulate and to the communities across America that are benefiting from CRA. And if I really feel that it can benefit those communities and we’re restricting that, it doesn’t mean we all have to do things the same.”

Meanwhile, the Fed has engaged in its own extensive research, conducting 29 round-tables across the country.  In response to McWIlliams' comments, a Fed spokesperson told American Banker, "As we move forward, we will continue to collaborate and work closely with our fellow regulatory agencies as well as engaging with banks and community stakeholders. Our goal remains to move forward together while ensuring CRA remains relevant for years to come.”

What’s Next for CRA?

At this point, it’s anybody’s guess. Maybe the agencies will reach an agreement this fall. Maybe the OCC will decide to go it alone. Maybe the idea will be kicked around for a few more years before anything happens.

Whatever happens, make sure you stay tuned to the Ntrupoint blog. We’ll keep you informed of all the latest updates, so when your boss wonders what’s going on with CRA reform, you’ll look like a compliance rock star with a ready answer.

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