In a revised Policies and Procedures Manual, the Office of the Comptroller of the Currency ("OCC") clarified how its Community Reinvestment Act ("CRA") evaluation of certain banking organizations is impacted by evidence of discriminatory or other illegal credit practices.
The revised manual outlines the CRA rating of a national bank, federal savings association or federal branch based on evidence of discriminatory or other illegal credit practices. As explained in the manual, in the event that illegal credit practices are revealed, the OCC:
- will downgrade a bank's composite or competent rating by one rating level, "unless such illegal practices are found to be particularly egregious," as a general policy; and
- will not lower a bank's CRA rating if the OCC determines that the bank has taken remedial actions, as a general policy.
Commentary / Mark Chorazak
We are clearly in the season of CRA reform. The OCC's revised rating guidance follows the Treasury Department's set of recommendations from earlier this year on ways to modernize the CRA. The banking agencies are expected to issue a formal proposal to revise existing CRA regulations in the near term. A key challenge will be how "assessment areas" should be defined in an era when banking is no longer a brick-and-mortar business and where banking transactions are increasingly done online.
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