83 FR 45053 - Reforming the Community Reinvestment Act Regulatory Framework

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency

Federal Register Volume 83, Issue 172 (September 5, 2018)

Page Range		45053-45059
FR Document		2018-19169

The Office of the Comptroller of the Currency (OCC or agency) invites comments on this advance notice of proposed rulemaking (ANPR) to solicit ideas for building a new framework to transform or modernize the regulations that implement the Community Reinvestment Act of 1977 (CRA). A new CRA regulatory framework would help regulated financial institutions more effectively serve the convenience and needs of their communities by encouraging more lending, investment, and activity where it is needed most; evaluating CRA activities more consistently; and providing greater clarity regarding CRA-qualifying activities. A transformed or modernized framework also would facilitate more timely evaluations of bank CRA performance, offer greater transparency regarding ratings, promote a consistent interpretation of the CRA, and encourage increased community and economic development in low- and moderate-income (LMI) areas. Revisions of this nature are consistent with the original intent of the CRA: To help meet the credit needs of the communities that banks serve. In addition, these types of revisions would align with the transformation of the banking industry and reduce the complexity, ambiguity, and burden associated with the regulations.

Federal Register, Volume 83 Issue 172 (Wednesday, September 5, 2018)

[Federal Register Volume 83, Number 172 (Wednesday, September 5, 2018)]
[Proposed Rules]
[Pages 45053-45059]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-19169]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 25 and 195

[Docket ID OCC-2018-0008]
RIN 1557-AE34

Reforming the Community Reinvestment Act Regulatory Framework

AGENCY: Office of the Comptroller of the Currency.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency (OCC or agency)
invites comments on this advance notice of proposed rulemaking (ANPR)
to solicit ideas for building a new framework to transform or modernize
the regulations that implement the Community Reinvestment Act of 1977
(CRA). A new CRA regulatory framework would help regulated financial
institutions more effectively serve the convenience and needs of their
communities by encouraging more lending, investment, and activity where
it is needed most; evaluating CRA activities more consistently; and
providing greater clarity regarding CRA-qualifying activities. A
transformed or modernized framework also would facilitate more timely
evaluations of bank CRA performance, offer greater transparency
regarding ratings, promote a consistent interpretation of the CRA, and
encourage increased community and economic development in low- and
moderate-income (LMI) areas. Revisions of this nature are consistent
with the original intent of the CRA: To help meet the credit needs of
the communities that banks serve. In addition, these types of revisions
would align with the transformation of the banking industry and reduce
the complexity, ambiguity, and burden associated with the regulations.

DATES: Comments on this ANPR must be received on or before November 19,
2018.

ADDRESSES: Comments should be directed to:
Commenters are encouraged to submit comments through the Federal
eRulemaking Portal or email, if possible. Please use the title
``Reforming the Community Reinvestment Act Regulatory Framework'' to
facilitate the organization and distribution of the comments. You may
submit comments by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
www.regulations.gov. Enter ``Docket ID OCC-2018-0008'' in the Search
box and click ``Search.'' Click on ``Comment Now'' to submit public
comments. Click on the ``Help'' tab on the Regulations.gov home page to
get information on using Regulations.gov, including instructions for
submitting public comments.
Email: regs.comments@occ.treas.gov.
Mail: Legislative and Regulatory Activities Division,
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2018-0008'' in your comment. In general, the OCC will
enter all relevant comments received into the docket and publish your
comment on the Regulations.gov website without change, including any
business or personal information that you provide, such as name and
address information, email addresses, or phone numbers. Comments
received, including attachments and other supporting materials, are
part of the public record and subject to public disclosure. Do not
include any information in your comment or supporting materials that
you consider confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically: Go to
www.regulations.gov. Enter ``Docket ID OCC-2018-0008'' in the Search
box and click ``Search.'' Click on ``Open Docket Folder'' on the right
side of the screen. Comments and supporting materials can be viewed and
filtered by clicking on ``View all documents and comments in this
docket'' and then

[[Page 45054]]

using the filtering tools on the left side of the screen. Click on the
``Help'' tab on the Regulations.gov home page to get information on
using Regulations.gov. The docket may be viewed after the close of the
comment period in the same manner as during the comment period.
Viewing Comments Personally: You may personally inspect
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For
security reasons, the OCC requires that visitors make an appointment to
inspect comments. You may do so by calling (202) 649-6700 or, for
persons who are deaf or hearing impaired, TTY (202) 649-5597. Upon
arrival, visitors will be required to present valid government-issued
photo identification and submit to security screening in order to
inspect comments.

FOR FURTHER INFORMATION CONTACT:
OCC: Vonda J. Eanes, Director for CRA and Fair Lending Policy,
Compliance Risk Policy Division, (202) 649-5470; Emily R. Boyes, Senior
Attorney, (202) 649-6350, Karen E. McSweeney, Special Counsel, (202)
649-5490, and Allison Hester-Haddad, Counsel, (202) 649-5490, Chief
Counsel's Office; for persons who are deaf or hearing impaired, TTY
(202) 649-5597; or Office of the Comptroller of the Currency, 400 7th
Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Background and Introduction

The Community Reinvestment Act of 1977 \1\ was enacted to encourage
financial institutions \2\ (banks) to help meet the credit needs of the
communities that they serve, including LMI neighborhoods, consistent
with the banks' safe and sound operations. In passing the CRA, Congress
established that (1) banks are required by law to demonstrate that
their deposit facilities serve the convenience and needs of the
communities in which they are chartered to do business; (2) the
convenience and needs of communities include the need for credit
services as well as deposit services; and (3) banks have a continuing
and affirmative obligation to help meet the credit needs of the local
communities in which they are chartered.\3\ The statute directed each
appropriate federal financial supervisory agency (i.e., the OCC, the
Board of Governors of the Federal Reserve System, and the Federal
Deposit Insurance Corporation (collectively, agencies)) to assess the
record of a bank in meeting the credit needs of its entire community,
including LMI neighborhoods; \4\ take this record into account when
evaluating the bank's application for a deposit facility; \5\ and
report to Congress the actions it has taken to carry out its CRA
responsibilities.\6\ The CRA directed each agency to publish
regulations to carry out the statute's purpose.\7\
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\1\ Public Law 95-128, 91 Stat. 1147 (October 12, 1977),
codified at 12 U.S.C. 2901 et seq.
\2\ 12 U.S.C. 2902(2) defines ``regulated financial
institution'' to mean an ``insured depository institution'' as
defined in 12 U.S.C. 1813. Twelve U.S.C. 1813(c)(2) defines
``insured depository institution'' to mean any bank or savings
association whose deposits are insured by the Federal Deposit
Insurance Corporation.
\3\ 12 U.S.C. 2901(a).
\4\ 12 U.S.C. 2903(a)(1).
\5\ 12 U.S.C. 2903(a)(2).
\6\ 12 U.S.C. 2904.
\7\ 12 U.S.C. 2905.
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Since the CRA's enactment, Congress has amended the statute
numerous times, including in the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 \8\ (which required public
disclosure of a bank's CRA written evaluation and rating); the Federal
Deposit Insurance Corporation Improvement Act of 1991 \9\ (which
required the inclusion of a bank's CRA examination data in the
determination of its CRA rating); the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 \10\ (which (1) required an agency
to consider an out-of-state national bank's or state bank's CRA rating
when determining whether to allow interstate branches; and (2)
prescribed certain requirements for the contents of the written CRA
evaluation for banks with interstate branches); and the Gramm-Leach-
Bliley Act of 1999 \11\ (which, among other things, provided regulatory
relief for smaller banks by reducing the frequency of their CRA
examinations).
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\8\ Public Law 101-73, 103 Stat. 183 (August 9, 1989).
\9\ Public Law 102-242, 105 Stat. 2236 (December 19, 1991).
\10\ Public Law 103-328, 108 Stat. 2338 (September 29, 1994).
\11\ Public Law 106-102, 113 Stat. 1338 (November 12, 1999).
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In 1978, consistent with Congress' statutory directive, the
agencies promulgated the first CRA regulations.\12\ They have since
amended these regulations on several occasions, most significantly in
1995 and 2005.\13\ In addition, the agencies have periodically
published interpretations of the CRA regulations in the form of
Interagency Questions and Answers Regarding Community Reinvestment (Q&A
guidance).\14\
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\12\ 43 FR 47144 (October 12, 1978).
\13\ 60 FR 22156 (May 4, 1995); 70 FR 44256 (August 2, 2005).
Although adopted individually by each agency, the regulations have
generally been drafted on an interagency basis and released jointly.
\14\ The agencies have published the Q & A guidance for notice
and comment prior to final publication in the Federal Register.
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The CRA requires each agency to prepare a written evaluation of a
bank's record of meeting the credit needs of its entire community,
including LMI neighborhoods, at the conclusion of its CRA
evaluation.\15\ This report, known as a Performance Evaluation (PE), is
required to be a public document that presents an agency's conclusions
regarding a bank's overall performance for each ``assessment factor''
identified in the CRA regulations.\16\ A PE must also present facts and
data supporting the agency's conclusions \17\ and contain both the
bank's CRA rating and a description of the basis for the rating.\18\ A
bank's CRA rating is considered, for example, in applications to merge
or acquire another bank, open a branch, or relocate a main office or
branch.\19\ A bank with a CRA rating below ``satisfactory'' may be
restricted from certain activities until its next CRA evaluation, which
is generally one or more years in the future.
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\15\ 12 U.S.C. 2906.
\16\ 12 U.S.C. 2906(b)(1)(A)(i).
\17\ 12 U.S.C. 2906(b)(1)(A)(ii).
\18\ 12 U.S.C. 2906(b)(1)(A)(iii). There are four statutory
rating categories: Outstanding, satisfactory, needs to improve, and
substantial non-compliance (12 U.S.C. 2906(b)(2)).
\19\ 12 CFR 25.29 and 195.29.
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II. The Changing Banking Environment

Over the past two decades, the financial services industry has
undergone transformative changes, including the removal of bank
interstate branching restrictions and the expanded role of technology
in financial services. To better understand how banking products and
services are delivered to consumers in this evolving industry and how
these changes affect a bank's CRA performance, the agencies have
solicited feedback from the banking industry, community groups,
academics, and others (collectively, stakeholders) on several
occasions. For example, in 2010, the agencies held a series of joint
public hearings across the country and solicited written feedback
regarding how to update the CRA regulations in light of, among other
things, changes in how banking services were delivered to
consumers.\20\
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\20\ See ``Agencies Announce Public Hearings on Community
Reinvestment Act Regulations,'' Joint Press Release (June 17, 2010)
(available at https://www.occ.gov/news-issuances/news-releases/2010/nr-ia-2010-65.html).
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From 2014 through 2016, the agencies again solicited feedback on
the CRA, as part of the Economic Growth and

[[Page 45055]]

Regulatory Paperwork Reduction Act of 1996 review,\21\ and received
more than 60 comments about the CRA regulatory framework. These
comments raised issues related to regulatory burden, as well as broader
issues related to modernizing the CRA regulations and related Q&A
guidance. During 2017 and 2018, the OCC held numerous meetings with
bankers, community groups, non-profit organizations, legislators, and
other stakeholders and regulators to discuss the current CRA regulatory
framework and to solicit input on how to improve the current regulatory
framework.
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\21\ See, e.g., 80 FR 7980 (February 13, 2015).
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During 2017 and 2018, the U.S. Department of the Treasury (Treasury
Department) invited a diverse group of stakeholders to provide feedback
on how the CRA regulations could more effectively encourage economic
growth in the communities that banks serve.\22\ On April 3, 2018, the
Treasury Department issued recommendations to the agencies for broad
changes to the fundamental administration of the CRA based on the
feedback it had received. Specifically, the Treasury Department
recommended updating the approach to delineating assessment areas to
reflect the changing nature of banking; improving the evaluation
process to increase the timeliness of evaluations and enable greater
accountability for banks' CRA activity planning; increasing the clarity
and flexibility of CRA evaluations to foster transparency and
effectiveness in CRA rating determinations; and incorporating
performance incentives to encourage banks to meet the credit and
deposit needs of their communities.\23\
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\22\ Memorandum from the U.S. Department of the Treasury to the
Office of the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, and the Federal Deposit Insurance
Corporation (April 3, 2018) (available at https://home.treasury.gov/sites/default/files/2018-04/4-3-18%20CRA%20memo.pdf).
\23\ Id. at 2.
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As the financial services industry continues to evolve, many
stakeholders believe that the statutory purpose of the CRA--to
encourage banks to help meet the credit needs of the communities they
serve, including LMI areas, in a manner that is consistent with their
safe and sound operation--is not fully or effectively accomplished
through the current regulations. Although aspects of the current CRA
regulatory framework may be sufficient for certain locally focused and
less complex banks, stakeholders have expressed concern that the
current CRA regulatory framework no longer reflects how many banks and
consumers engage in the business of banking. Stakeholders have also
identified concerns about the lack of clarity, consistency, and
certainty with respect to current CRA regulatory requirements.

III. Objectives of the ANPR

The OCC has reached out to and engaged with over 1,000 stakeholders
on the existing CRA framework and whether it is meeting the credit
needs of communities, given the changing landscape of the financial
services industry and banking. The OCC's goal for issuing this ANPR is
to obtain additional public input on how to revise the CRA regulations
to encourage more local and nationwide community and economic
development--and thus promote economic opportunity--by encouraging
banks to lend more to LMI areas, small businesses, and other
communities in need of financial services. The agency invites comments
on how to revise the CRA regulations to bring greater clarity,
consistency, and certainty to the evaluation process, as well as to
provide flexibility to accommodate banks with different business
strategies. The OCC also invites comments on how to update assessment
area definitions to accommodate digital lending channels, while
retaining a focus on the communities in which bank branches are
located. Additionally, the agency invites comments on clarifying and
broadening the range of activities supporting community and economic
development that qualify for CRA consideration.
The following sections of the ANPR invite comments from all
stakeholders on changing the current approach to performance
evaluations; developing metrics to increase the objectivity of
performance measures; updating how communities and assessment areas are
defined to accommodate banks with different business strategies and
allow banks to help meet the needs of underserved communities;
broadening the range of qualifying activities to better support the
purpose of the CRA; and enhancing recordkeeping and reporting. The OCC
invites all comments and suggestions for other ways to improve the CRA
regulatory framework.

IV. Current CRA Regulatory Approach

A. Current Performance Evaluation Methods

The OCC's current CRA regulations provide different methods to
evaluate a bank's CRA performance depending on the bank's asset size
and business strategy.\24\ Some stakeholders have expressed the view
that the current regulatory framework is too complex, the asset
thresholds for the performance tests and standards have not kept pace
with bank asset sizes, and the standards are not applied transparently
or consistently in performance evaluations.
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\24\ The asset sizes are adjusted annually based on the Consumer
Price Index.
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Under the current framework,
small banks (banks with less than $313 million in assets)
are evaluated under a retail lending test that may also consider
community development (CD) loans. CD investments and services may be
considered for an outstanding rating at the bank's option, but only if
the bank meets or exceeds the lending test criteria in the small bank
performance standards.
intermediate small banks (ISB) (banks with asset sizes
between $313 million and $1.252 billion) are evaluated under the retail
lending test for small banks and a CD test. The ISB CD test evaluates
all CD activities together.
large banks (banks with more than $1.252 billion in
assets) are evaluated under the lending, investment, and service tests.
The large bank lending and service tests consider both retail and CD
activity, while the investment test focuses on qualified CD
investments.
wholesale and limited purpose banks are evaluated under a
CD test that considers activities in a much broader geographic area
than the area that is considered for large banks or ISBs.
a bank whose business predominantly consists of serving
the needs of military personnel who are not located within a defined
geographic area is evaluated under the performance test or standards
applicable to its size and business model; such a bank, however, may
delineate its entire deposit customer base as its assessment area.
any bank can elect to be evaluated under a strategic plan
that sets out measurable, annual goals for lending, investment, and
service to achieve a satisfactory or outstanding rating. A strategic
plan must be developed with community input and approved by the bank's
primary regulator.
Additionally, although the small bank, ISB, and large bank lending
tests share some common elements, other elements are unique to each
test. For example, to facilitate the evaluation of performance under
the large bank lending test, the CRA regulations require that certain
data on small business, small farm, and CD loans be collected and
reported annually. Small

[[Page 45056]]

banks and ISBs are not required to report this data.
Finally, the OCC also considers applicable performance context
information to inform its conclusions and CRA ratings in all cases.

B. Community and Assessment Areas

The CRA statute does not define ``community.'' The statute requires
the OCC to state conclusions, supported by facts and data, on banks'
performance in metropolitan areas and--for banks with branches in more
than one state--in the nonmetropolitan area of a state where a bank has
one or more domestic branches.\25\
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\25\ 12 U.S.C. 2906(b)(1)(B), (d)(3)(A). ``Domestic branch'' is
defined as any bank branch office or other bank facility that
accepts deposits, located in any state (12 U.S.C. 2906(e)(1)). For
banks that maintain domestic branches in two or more states, the OCC
must prepare separate written evaluations of performance in each
state in which banks maintain one or more domestic branches. For
banks that maintain domestic branches in two or more states within a
multistate metropolitan area, the OCC must prepare a separate
written evaluation of performance within the multistate metropolitan
area (12 U.S.C. 2906(d)(1)(B), (d)(2)).
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The current CRA regulations also do not expressly define
``community''; they implement the concept by requiring a bank to
delineate one or more ``assessment area(s)'' in which the agency
evaluates the bank's record of helping to meet the credit needs of its
``community.'' \26\
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\26\ 12 CFR 25.41 and 195.41.
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The current CRA regulations specify what must be and what cannot be
included in the assessment area delineation. The current interpretation
of the regulations limits assessment area(s) to the area(s) surrounding
a bank's main office, branch offices, and deposit-taking automated
teller machines (ATMs).
A bank's CRA performance evaluation is based primarily on the CRA-
qualifying activities that occur in or serve a bank's assessment
area(s). For some banks, their assessment area(s) may not include a
substantial portion of the area(s) in which they conduct activities
that would otherwise qualify for CRA consideration. The activities that
occur outside of the bank's assessment area that do not have a purpose,
mandate, or function of serving the bank's assessment area generally
will not receive consideration unless the agency concludes that the
bank has been responsive to the needs of its assessment area(s). Even
then, the current CRA regulations and Q&A guidance generally limit
consideration of CD activities to the broader statewide or regional
areas that includes the bank's assessment area(s).\27\ Stakeholders
have expressed concern that, in practice, the lack of clarity in the
regulations and guidance limits banks' willingness or ability to engage
in CD activities outside of their assessment area(s).
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\27\ See Q & A guidance Sec. _.12(h)-6. For banks evaluated
pursuant to the CD test for wholesale or limited purpose banks, the
agencies also consider qualified investments, CD loans, and CD
services that benefit areas outside the bank's asessment area(s), if
the bank has adequately adressed the needs of its assessment area(s)
(12 CFR 25.25(e)(2) and 195.25(e)(2)).
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The current assessment area definition was developed when banking
was based largely on physical branch locations as the primary means of
delivering products and services. While some banks continue to conduct
most of their CRA-qualifying activities within their assessment
area(s), in part because of the current framework for evaluating CRA
performance, banking has evolved and the cost of operating branches has
increased. Changes in the industry offer more opportunities for banks
to engage in business outside of the geographies surrounding physical
branches. Numerous factors, including technological advances in the
delivery of banking services, shifting business models, and changes in
consumer behavior and preferences permit banks to engage in the
business of banking regardless of whether they have branches or, if
they do, the location of their branches.

C. Questions Regarding Current Regulatory Approach

The OCC invites comments on changes to transform or modernize the
current CRA regulatory framework, including with respect to the
following questions:
1. Are the current CRA regulations clear and easy to understand?
2. Are the current CRA regulations applied consistently?
3. Is the current CRA rating system objective, fair, and
transparent?
4. Two goals of the CRA are to help banks effectively serve the
convenience and needs of their entire communities and to encourage
banks to lend, invest, and provide services to LMI neighborhoods. Does
the current regulatory framework support these goals in light of how
banks and consumers now engage in the business of banking?
5. With the statutory purpose of the CRA in mind, what aspects of
the current regulatory framework are most successful in achieving that
purpose?
6. If the current regulatory framework is changed, what features
and aspects of the current framework should be retained?

V. A Modernized CRA

A. Revising or Transforming the Current Regulatory Approach

1. Revising the Current Performance Evaluation Method
The OCC invites comments on ways to modernize the current
regulatory framework by modifying and streamlining the existing CRA
performance tests, such as by implementing an alternative evaluation
method or by increasing and enhancing the use of metrics within the
performance tests. One such alternative evaluation method could replace
existing performance tests and standards and separately evaluate retail
or CD activities for all banks, accounting for variations in size,
business model, and other factors. This approach could include updated
metrics that take into account information on a bank's performance
context, such as the demographic characteristics and the economic and
financial conditions of specific communities.
2. Metric-Based Framework
The OCC also invites comments on a more transformational approach
to the CRA regulatory framework that could (1) increase the
transparency of how a bank's CRA performance is evaluated by using
quantitative benchmarks for specific ratings and clear standards for
quantifying CRA activities; (2) define ``community'' more broadly to
include additional domestic geographies in which the bank engages in
the business of banking; and (3) expand the types of activities that
would receive CRA consideration in a CRA evaluation, with a focus on
lending, investments, and services for LMI geographies and individuals
and other geographies and populations in need of financial services.
Such an approach could simplify and improve the implementation of the
CRA while better effectuating the law's directive to encourage banks to
serve their entire communities, including LMI neighborhoods, consistent
with safe and sound operations.
One approach is to create a metric-based performance measurement
system with thresholds or ranges (benchmarks) that correspond to the
four statutory CRA rating categories.\28\ These benchmarks could
represent the overall or ``macro'' benchmarks for obtaining a

[[Page 45057]]

particular rating and could be composed of the ``micro'' components of
CRA qualifying lending, investments, and services. These components
could be aggregated to achieve the overall benchmark or level of
performance. This approach would allow flexibility to accommodate bank
capacity and business models while facilitating the comparison among
banks of all sizes and business models and the evaluation against an
objective, transparent threshold.
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\28\ As noted in footnote 18, the four statutory rating
categories are outstanding, satisfactory, needs to improve, and
substantial non-compliance (12 U.S.C. 2906(b)(2)).
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In a metric-based framework designed to bring clarity to the
determination of CRA ratings, the benchmarks representing the dollar
value of CRA-qualified activity could be compared to readily available
and objective criteria, such as, a percentage of domestic assets,
deposits, or capital from the bank's balance sheet, to calculate a
ratio that could correspond to the benchmark established for each
rating category. For example, a bank with $1 billion in total assets
that conducted $100 million of CRA-qualifying activities in the
aggregate would achieve a 10-percent ratio, if total assets were used
for the denominator.
The OCC invites comments on the above approaches, including with
respect to the following questions:
7. How could an alternative method for evaluating CRA performance
be applied, taking into account the following factors: bank business
model, asset size, delivery channels, and branch structure; measures or
criteria used to evaluate performance, including appropriate metrics;
and consideration for qualifying activities that serve areas outside a
bank's delineated assessment areas?
8. How could appropriate benchmarks for CRA ratings be established
under a metric-based framework approach, taking into account balance-
sheet items, such as assets, deposits, or capital and other factors,
including business models?
9. How could performance context be included in such a metric-based
approach?
10. In a metric-based framework, additional weight could be given
to certain categories of CRA-qualifying activities, such as activities
in certain geographies, including LMI areas near bank branches;
activities targeted to LMI borrowers; or activities that are
particularly innovative, complex, or impactful on the bank's community.
How could a metric-based framework most effectively apply different
weighting to such categories of activities? For example, should a $1
loan product count as $1 in the aggregate, while a $1 CD equity
investment count as $2 in the aggregate?
11. How can community involvement be included in an evaluation
process that uses a metric-based framework?
12. For purposes of evaluating performance, CD services are not
currently quantified in a standard way, such as by dollar value. Under
a metric-based framework, how should CD services be quantified? For
example, a bank could calculate the value of 1,000 hours of volunteer
work by multiplying it by an average labor rate and then include that
number in the aggregate total value of its CRA activity.
3. Redefining Communities and Assessment Areas
To recognize evolving banking practices, the OCC invites comments
on ways to update how a bank's community is interpreted for purposes of
implementing the CRA. Under an updated approach, banks would continue
to receive consideration for CRA-qualifying activities within their
branch and deposit-taking ATM footprint and could receive consideration
for providing these types of beneficial activities in LMI areas outside
of their branch and deposit-taking ATM footprint and other underserved
areas. An updated approach to defining assessment areas could allow a
bank to include additional areas tied to the bank's business operations
(e.g., areas where the bank has a concentration of deposits or loans,
non-bank affiliate offices, or loan production offices). Under such an
approach, banks could include these additional geographies in their
assessment areas, enabling consideration of CRA-qualifying activities
conducted within these areas. Such an approach could address concerns
that the current CRA assessment areas can restrict bank lending or
investment in areas of need, by expanding the circumstances in which
banks receive consideration for CRA-qualifying activities beyond their
delineated assessment areas. Providing consideration for activities
conducted in targeted areas or areas that have historically been
largely excluded from consideration such as remote rural populations or
Indian country, for example, could help promote services and activities
in those areas as well. It may also accommodate banks that either
operate with business models that have no physical branches or banks
with services that reach far beyond the geographic location of their
physical branches. While the OCC would continue to assess CRA
performance as required by statute, qualifying activities outside of
the areas where a bank has its main office, branch offices, and
deposit-taking ATMs could be considered and assessed in the aggregate,
at the bank level, in addition to activities in its traditional
assessment areas or local geographies.
The OCC invites comments on this approach, including with respect
to the following questions:
13. How could the current approach to delineating assessment areas
be updated to consider a bank's business operations, in addition to
branches and deposit-taking ATMs, as well as more of the communities
that banks serve, including where the bank has a concentration of
deposits, lending, employees, depositors, or borrowers?
14. Should bank activities in the LMI geographies surrounding
branches and deposit-taking ATMs, or in other targeted geographic
areas, be weighted (and if so, how), or should some other approach be
taken to ensure that activities in those areas continue to receive
appropriate focus from banks, such as requiring banks to have some
minimum level of performance in the metropolitan statistical area (MSA)
and non-MSA areas in which they have domestic branches before receiving
credit for activity outside those areas?

B. Expanding CRA-Qualifying Activities

The OCC invites comments on the type and categories of activities
that should receive CRA consideration. Within the current regulation's
performance tests and standards, CRA activities are generally
considered in two categories--retail and CD--with the objective of
encouraging banks to engage in a broad range of CRA-qualifying
activities that are within LMI and other areas specified in the
regulations and that benefit LMI individuals, small businesses, and
small farms. For the most part, CRA-qualifying activities are defined
by the regulations and further described in the Q&A guidance. The
statute, however, requires the agencies to consider low-cost education
loans provided to low-income borrowers, and it permits the agencies to
consider activities undertaken by a non-minority-owned bank in
conjunction with a minority- or women-owned bank or low-income credit
union (MWLI), provided these activities benefit the MWLI's local
community.
Some stakeholders have expressed concerns about which activities
receive CRA consideration. These stakeholders generally express a
desire for more clarity and certainty regarding which CD, small
business, lending, and retail service activities will receive CRA
consideration.

[[Page 45058]]

The OCC invites comments on regulatory changes that could ensure
CRA consideration for a broad range of activities supporting community
and economic development in banks' CRA performance evaluations, while
retaining a focus on LMI populations and areas, and set clear standards
for determining whether an activity qualifies for CRA consideration.
The OCC recognizes that providing greater clarity on qualifying
activities could be beneficial in supporting the goals of the CRA for
all banks, including those with more traditional business models.
Additionally, under the current regulatory framework banks receive
CRA consideration for certain small business loans. The CRA regulatory
definition of a small business loan mirrors the definition found in
bank Call Reports.\29\
---------------------------------------------------------------------------

\29\ Loans to small businesses are defined as those with
original amounts of $1 million or less reported on the institution's
Call Report as either ``loans secured by nonfarm residential
property'' or ``commercial and industrial loans.'' In addition to
receiving consideration for business loan in amounts of $1 million
or less, a bank may also receive CRA consideration for business
loans of more than $1 million if the loan has a primary purpose of
``community development'' as that term is defined in the CRA
regulations.
---------------------------------------------------------------------------

The OCC also considers whether a large bank uses innovative or
flexible lending practices in addressing the credit needs of LMI
borrowers or geographies. Depending on the facts and circumstances, a
bank that develops a unique approach or lending program targeted to
support the needs of borrowers or small businesses in LMI geographies,
LMI borrowers, or small businesses may be eligible to receive
consideration under CRA for those activities.
The OCC invites comments on the role of small business credit in
LMI areas or for LMI small business owners, and under what
circumstances small business loans should receive CRA consideration.
The OCC invites comments on qualifying activities, including with
respect to the following questions:
15. How should ``community and economic development'' be defined to
better address community needs and to incentivize banks to lend,
invest, and provide services that further the purposes of the CRA? For
example, should certain categories of loans and investments be presumed
to receive consideration, such as those that support projects,
programs, or organizations with a mission, purpose, or intent of
community or economic development; or, within such categories, only
those that are defined as community or economic development by federal,
state, local, or tribal governments?
16. Should there be specific standards for CD activities to receive
consideration, such as requiring those activities to provide identified
benefits to LMI individuals and small business borrowers or to lend to
and invest in LMI communities or other areas or populations identified
by federal, state, local, or tribal government as distressed or
underserved, including designated major disaster areas (hereinafter
referred to as ``other identified areas'' or ``other identified
populations'')?
17. Are there certain categories of CD activities that should only
receive consideration if they benefit specified underserved populations
or areas, such as providing credit or technical assistance to small
businesses or small farms; credit or financial services to LMI
individuals or other identified populations (such as the disabled); or
social services for LMI individuals or job creation, workforce
development, internships, or apprentice programs for LMI individuals or
other identified populations?
18. Should consideration for certain activities that might
otherwise qualify as CD be limited or excluded? For example, how should
investments in loan-backed securities be considered?
19. How should financial education or literacy programs, including
digital literacy, be considered?
20. Should bank activities to expand the use of small and
disadvantaged service providers receive CRA consideration as CD
activities?
21. The current regulatory framework provides for CRA performance
evaluations to consider home mortgage, small business, and small farm
lending, and consumer lending in certain circumstances. Should these
categories of lending continue to be considered as CRA-qualifying
activities or should consideration in any or all of these categories be
limited to loans to LMI borrowers and loans in LMI or other identified
areas?
22. Under what circumstances should consumer lending be considered
as a CRA-qualifying activity? For example, should student, auto, credit
card, or affordably priced small-dollar loans receive consideration? If
so, what loan features or characteristics should be considered in
deciding whether loans in these categories are CRA-qualifying?
23. Under what circumstances should small business loans receive
CRA consideration? For example should consideration be given to all
loans to businesses that meet the Small Business Administration
standards for small businesses?
24. How should small business loans with a CD purpose be
considered?
25. Should a bank's loan purchases and loan originations receive
equal consideration when evaluating that bank's lending performance?
26. Should loans originated by a bank to hold in portfolio be
weighted differently from loans originated for sale? If so, how?
27. Should bank delivery channels, branching patterns, and branches
in LMI areas be reviewed as part of the CRA evaluations? If so, what
factors should be considered?
28. The CRA states that the agencies may take into consideration in
the CRA evaluation of a non-minority-owned and non-women-owned
financial institution (majority-owned institution) any capital
investment, loan participation, and other venture undertaken in
cooperation with MWLIs, even if these activities do not benefit the
majority-owned institution's community, provided that these activities
help meet the credit needs of local communities in which the MWLIs are
chartered. What types of ventures should be eligible for such
consideration, and how should such ventures be considered?

C. Recordkeeping and Reporting

The OCC also invites comments on how to modernize CRA regulations
to promote transparency and consistency in recordkeeping, reporting,
and examination requirements. The current regulatory approach does not
facilitate regular tracking, monitoring, and comparisons of levels of
CRA performance by banks and other stakeholders. One advantage of a
modernized CRA framework that uses objective reportable metrics could
be to allow for better tracking by banks of their overall CRA level of
performance on a regular, periodic basis. If a metric-based framework
and clarified standards for identifying and measuring qualifying
activities were implemented, such an approach could also allow
stakeholders to better understand the level of a bank's CRA performance
on a straightforward and timely basis.
This type of framework may involve an updated approach to the OCC's
CRA-related data collection to be used for monitoring and assessing
banks' CRA performance. Additionally, under a metric-based framework,
the ability to differentiate among activities based on their location,
type, or other factors may involve additional recordkeeping and
reporting.
Such reporting could also support comparison among banks, their
peer groups, or the entire industry and would

[[Page 45059]]

support understanding of industry-wide activity and trends.
The OCC invites comments on CRA recordkeeping and reporting
requirements. The OCC notes that additional feedback on recordkeeping
and reporting may be necessary if a new framework is proposed in a
future rulemaking.
29. Could the reporting of data gathered using a metric-based
approach on a regular, periodic basis better support the tracking,
monitoring, and comparison of CRA performance levels?
30. How frequently should banks report CRA activity data for the
OCC to evaluate and report on CRA performance under a revised
regulatory framework?
31. As required by law, and to the extent possible, the OCC
attempts to minimize regulatory burden in its rulemakings consistent
with the effective implementation of its statutory responsibilities.
The OCC is committed to evaluating the economic impact of, and costs
and benefits associated with, any changes that are proposed to the CRA
regulations. Under the current regulatory framework, what are the
annual costs, in dollars or staff hours, associated with CRA-related
data collection, recordkeeping, and reporting?

D. Additional Options or Approaches

The OCC invites other ideas and options for modernizing the CRA
regulatory framework not identified in this ANPR.

Dated: August 28, 2018.
Joseph M. Otting,
Comptroller of the Currency.
[FR Doc. 2018-19169 Filed 9-4-18; 8:45 am]
BILLING CODE 4810-33-P

Federal Register / Vol. 83, No. 172 / Wednesday, September 5, 2018 / Proposed Rules 45059

support understanding of industry-wide in the safety zone unless authorized by Guard proposes this rulemaking under
activity and trends. the Captain of the Port Buffalo or a authority 33 U.S.C. 1231.
The OCC invites comments on CRA designated representative. We invite
recordkeeping and reporting III. Discussion of Proposed Rule
your comments on this proposed
requirements. The OCC notes that rulemaking. The COTP proposes to establish a
additional feedback on recordkeeping temporary safety zone to be enforced
DATES: Comments and related material
and reporting may be necessary if a new intermittently from 8:00 a.m. until 6:00
must be received by the Coast Guard on
framework is proposed in a future p.m. on October 20, 2018. The safety
or before October 5, 2018.
rulemaking. zone will cover all navigable waters
29. Could the reporting of data ADDRESSES: You may submit comments between the two points starting at
gathered using a metric-based approach identified by docket number USCG– position 42°52′19.4″ N, 78°52′25.3″ W,
on a regular, periodic basis better 2018–0832 using the Federal and ending at position 42°51′36.7″ N,
support the tracking, monitoring, and eRulemaking Portal at https:// 78°50′56.0″ W, on the Buffalo River,
comparison of CRA performance levels? www.regulations.gov. See the ‘‘Public Buffalo, NY. The duration of the zone is
30. How frequently should banks Participation and Request for intended to ensure the safety of vessels
report CRA activity data for the OCC to Comments’’ portion of the and these navigable waters before,
evaluate and report on CRA SUPPLEMENTARY INFORMATION section for during, and after the scheduled rowboat
performance under a revised regulatory further instructions on submitting races between 8:00 a.m. and 6:00 p.m.
framework? comments. No vessel or person will be permitted to
31. As required by law, and to the FOR FURTHER INFORMATION CONTACT: If enter the safety zone without obtaining
extent possible, the OCC attempts to you have questions about this proposed permission from the COTP or a
minimize regulatory burden in its rulemaking, call or email LTJG Sean designated representative. The
rulemakings consistent with the Dolan, Chief of Waterways Management, regulatory text we are proposing appears
effective implementation of its statutory U.S. Coast Guard Sector Buffalo; at the end of this document.
responsibilities. The OCC is committed telephone 716–843–9322, email D09-
to evaluating the economic impact of, IV. Regulatory Analyses
SMB-SECBuffalo-WWM@uscg.mil.
and costs and benefits associated with, SUPPLEMENTARY INFORMATION: We developed this proposed rule after
any changes that are proposed to the considering numerous statutes and
CRA regulations. Under the current I. Table of Abbreviations Executive orders related to rulemaking.
regulatory framework, what are the CFR Code of Federal Regulations Below we summarize our analyses
annual costs, in dollars or staff hours, DHS Department of Homeland Security based on a number of these statutes and
associated with CRA-related data FR Federal Register Executive orders and we discuss First
collection, recordkeeping, and NPRM Notice of proposed rulemaking Amendment rights of protestors.
reporting? § Section
U.S.C. United States Code A. Regulatory Planning and Review
D. Additional Options or Approaches Executive Orders 12866 and 13563
II. Background, Purpose, and Legal
The OCC invites other ideas and Basis direct agencies to assess the costs and
options for modernizing the CRA benefits of available regulatory
regulatory framework not identified in On August 16, 2018, the Buffalo alternatives and, if regulation is
this ANPR. Scholastic Rowing Association notified necessary, to select regulatory
the Coast Guard that it would be approaches that maximize net benefits.
Dated: August 28, 2018. conducting a rowing regatta from 8:00 Executive Order 13771 directs agencies
Joseph M. Otting, a.m. to 6:00 p.m. on October 20, 2018, to control regulatory costs through a
Comptroller of the Currency. in conjunction with the Head of the budgeting process. This NPRM has not
[FR Doc. 2018–19169 Filed 9–4–18; 8:45 am] Buffalo Regatta. The rowing vessels will been designated a ‘‘significant
BILLING CODE 4810–33–P launch for their warmup from the Ohio regulatory action,’’ under Executive
St. Kayak Launch, at position Order 12866. Accordingly, the NPRM
42°51′55.9″ N, 78°52′07.2″ W, then has not been reviewed by the Office of
DEPARTMENT OF HOMELAND proceed to travel upriver to turnaround Management and Budget (OMB), and
SECURITY at position 42°51′36.7″ N, 78°50′56.0″ pursuant to OMB guidance it is exempt
W. The race will then begin at position from the requirements of Executive
Coast Guard 42°51′40.0″ N, 78°50′56.5″ W, and Order 13771.
proceed downriver to the finish line This regulatory action determination
33 CFR Part 165 near the Ohio St. bridge at position is based on the size, location, duration,
[Docket Number USCG–2018–0832] 42°52′17.5″ N, 78°52′21.0″ W. and time-of-day of the safety zone.
Participants will then proceed further Vessel traffic would not be able to safely
RIN 1625–AA00 upriver to the turnaround point located transit around this safety zone, which
at position 42°52′19.4″ N, 78°52′25.3″ would impact a small designated area of
Safety Zone; Head of the Buffalo W, and return to the starting point. The the Buffalo River. However, the Coast
Regatta; Buffalo River, Buffalo, NY Captain of the Port Buffalo (COTP) has Guard would issue a Broadcast Notice to
AGENCY: Coast Guard, DHS. determined that potential hazards Mariners via VHF–FM marine channel
daltland on DSKBBV9HB2PROD with PROPOSALS

ACTION: Notice of proposed rulemaking. associated with rowboat races would be 16 about the zone, and the rule would
a safety concern for anyone within that allow vessels to seek permission to enter
SUMMARY: The Coast Guard proposes to stretch of the Buffalo River. the zone.
establish a temporary safety zone for The purpose of this rulemaking is to
certain waters of the Buffalo River enhance the safety of vessels and racers B. Impact on Small Entities
during the Head of the Buffalo Regatta. on the navigable waters within the The Regulatory Flexibility Act of
This proposed rulemaking would above stated points, before, during, and 1980, 5 U.S.C. 601–612, as amended,
prohibit persons and vessels from being after the scheduled event. The Coast requires Federal agencies to consider

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Document Created: 2018-09-05 01:59:14
Document Modified: 2018-09-05 01:59:14

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Advance notice of proposed rulemaking.
Dates		Comments on this ANPR must be received on or before November 19, 2018.
Contact		OCC: Vonda J. Eanes, Director for CRA and Fair Lending Policy, Compliance Risk Policy Division, (202) 649-5470; Emily R. Boyes, Senior Attorney, (202) 649-6350, Karen E. McSweeney, Special Counsel, (202) 649-5490, and Allison Hester-Haddad, Counsel, (202) 649-5490, Chief Counsel's Office; for persons who are deaf or hearing impaired, TTY (202) 649-5597; or Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
FR Citation		83 FR 45053
RIN Number		1557-AE34
CFR Citation		12 CFR 195 12 CFR 25

83 FR 45053 - Reforming the Community Reinvestment Act Regulatory Framework

DEPARTMENT OF THE TREASURYOffice of the Comptroller of the Currency

Federal Register Volume 83, Issue 172 (September 5, 2018)

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency