UPDATE: Oct. 21, 2020: In an expected outcome, the Senate on Monday rejected, by a 48-43 vote, a resolution that would have blocked the Office of the Comptroller of the Currency's revamp of the Community Reinvestment Act (CRA) from taking effect.
"The OCC's final rule is wrong in substance and in process," Sen. Chris Coons, D-DE, said in a statement, according to American Banker. "In substance, it is unlikely to encourage investment in under resourced and overlooked regions. ... In process, the OCC hasn’t worked to achieve consensus with fellow federal regulators."
Detractors said the OCC's revamp is overly reliant on a single test score, and criticized the emphasis it puts on the amount banks invest in lower-income areas. Under the OCC rule, a bank could be compliant through few large projects in designated CRA zones, rather than through work in small-dollar lending to residents and small businesses.
Sen. Susan Collins, R-ME, was the only Republican to vote to overturn the rule, which drew flak for the speed with which the OCC put it together — and for the lack of support from the likes of the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC). The Fed last month proposed its own rewrite of the 1977 anti-redlining rule. Ninety days remain on that proposal's public comment period.
Democrats had sought to shoot down the rule "because now is not the time to be gutting investment in low- and middle-income communities and communities of color," said a spokesperson for Sen. Sherrod Brown, D-OH. "These communities need more access to credit and investment, not less."
The House passed the resolution against the OCC's CRA rewrite in June by a 230-179 vote. Even if the measure had passed the Senate, President Donald Trump had vowed to veto it.
UPDATE: June 30, 2020: The House passed a resolution Monday, by a 230-179 vote, disapproving the Office of the Comptroller of the Currency’s rewrite of the Community Reinvestment Act. The measure moves on to the Senate, where it requires a simple majority to pass. But if that happens, President Donald Trump has vowed to veto it — essentially killing any chance for the OCC rule to be overturned.
The OCC released the May 20 rule without the backing of fellow regulators. FDIC Chair Jelena McWilliams told Bloomberg Law on Friday that her agency won’t issue its own revamp during the coronavirus pandemic.
Community Reinvestment Act rule revisions are better suited for “peacetime, when things are calm, the economy’s doing well,” she said.
- House Financial Services Chairwoman Maxine Waters, D-CA, and Rep. Gregory Meeks, D-NY, introduced a resolution Thursday to overturn the Office of the Comptroller of the Currency's (OCC) final rule revising the Community Reinvestment Act (CRA).
- The OCC rule, issued May 20, can be challenged under the Congressional Review Act within 60 days of its publication.
- The lawmakers' effort may be dead on arrival. Any initiative blocking a rule requires a majority vote from both chambers of Congress and a signature from President Donald Trump. Neither he nor the Republican-led Senate are likely to back the measure.
The CRA is meant to discourage banks from discriminating against borrowers in low-income areas. Reforming the 1977 rule was a long-held personal goal of former OCC chief Joseph Otting, who issued the final rule a day before announcing his resignation — and without backing from fellow regulators such as the Federal Deposit Insurance Corp. and the Federal Reserve.
The timing of the final rule drew Waters' attention. "It is completely unacceptable for the OCC to use the cover of a pandemic to rush out a rule that will be harmful to communities that are already suffering during this crisis," she said in a press release. "The Community Reinvestment Act is an essential law that was put in place to prevent redlining and to require banks to invest and lend responsibly in the communities where they are chartered."
Regardless of the resolution's chances to advance, the measure may serve as notice of intention if Democrats wrest control of the White House away from the GOP in November’s election. A new administration could appoint regulators who would rewrite the rule.