Bank Regulator Rescinds Trump Rewrite of Community Lending Rules

A Trump administration rewrite of rules for evaluating banks’ lending and investments into low- and moderate-income communities is officially dead.

The Office of the Comptroller of the Currency on Tuesday issued a final rule rescinding a May 2020 rewrite of rules governing the Community Reinvestment Act.

The move reinstates CRA regulations that have been in place since 1995. The OCC has been working with the Federal Reserve and the Federal Deposit Insurance Corp. to modernize those rules and redefine the types of lending and investments that qualify for CRA credit.

The 1977 law empowers regulators to measure the amount of banks’ lending and investment in low- to moderate-income communities. The regulators also can stop mergers and other expansion plans if banks receive low grades.

The OCC under Comptroller of the Currency Joseph Otting updated its CRA rules in May 2020 without the Fed and the FDIC. The OCC rules allowed banks to get credit for the total volume of money pumped into communities rather than looking at the specific types of lending and investment they undertook.

Community groups said the OCC’s changes made it too easy for banks to get credit for low-income lending and investments, while some in the industry were unhappy with the compliance metrics that the agency put in place.

The Biden administration, under acting Comptroller Michael Hsu, proposed rescinding the Trump-era rules in September. Hsu has said that the OCC, the Fed and the FDIC are moving with deliberate speed together to update the regulations.

A Biden administration regulatory agenda issued Dec. 10 said that a revised CRA proposal could come as early as March 2022.