A proposal issued Tuesday by the Office of the Comptroller of the Currency (OCC) aims to establish benchmarks, thresholds and minimum values for "satisfactory" and "outstanding" ratings on aspects of the Community Reinvestment Act (CRA) exam.
But the agency said it needs more data from banks before it assigns concrete values.
Under the proposal, banks that see a 10% or greater drop in lending or investment in low- and moderate-income areas, compared with their historical data, will receive a "downward adjustment" in their CRA rating, the OCC said.
A decline that steep "cannot be explained by market conditions or other factors," the regulator wrote Tuesday.
Data the OCC receives from a mandatory information collection survey sent to banks will determine the scoring standards. To that end, the regulator is asking for four types of data.
- One would focus on a bank's "presence" — its main office, bank branches and other deposit-taking facilities.
- Another would take into account the "quantified dollar value of banks' CRA qualifying activities" through the lens of the framework the regulator established in its May revamp of the CRA.
- A third would compare a bank's retail loan applications against its CRA qualifying loan originations.
- Banks would also have to show how they distribute their branches in low- and moderate-income areas, in comparison with higher-income ones.
In what may be an olive branch to skeptics who posit that the regulator's new standards would make CRA exams easier to pass, the OCC said it would establish benchmarks, thresholds and minimums wherein the proportion of banks receiving outstanding or satisfactory ratings would not be greater than the proportion that received those marks historically.
The public comment period on the proposal spans 60 days. The OCC said it plans to issue a final rule that will include concrete values once it analyzes public comments and the survey data it receives.
The OCC issued a final rule in May, reframing the 43-year-old CRA, but it did so without the backing of the Federal Reserve or the Federal Deposit Insurance Corp. (FDIC). The regulator came under fire for the speed with which it churned out the rewrite, which was published a day before former Comptroller Joseph Otting announced his resignation.
The Fed proposed its own revamp of the CRA in September.