[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]





 
                    THE COMMUNITY REINVESTMENT ACT:

                       IS THE OCC UNDERMINING THE

                       LAW'S PURPOSE AND INTENT?

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 29, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-78
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                    




               U.S. GOVERNMENT PUBLISHING OFFICE 
42-793 PDF             WASHINGTON : 2021 
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
DENNY HECK, Washington               TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
BEN McADAMS, Utah                    LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    January 29, 2020.............................................     1
Appendix:
    January 29, 2020.............................................    69

                               WITNESSES
                      Wednesday, January 29, 2020

Otting, Hon. Joseph M., Comptroller of the Currency, Office of 
  the Comptroller of the Currency (OCC)..........................     5

                                APPENDIX

Prepared statements:
    Otting, Hon. Joseph M........................................    70

              Additional Material Submitted for the Record

Otting, Hon. Joseph M.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   103
    Written responses to questions for the record from 
      Representative Cleaver.....................................   146
    Written responses to questions for the record from 
      Representative Huizenga....................................   151
    Written responses to questions for the record from 
      Representative Luetkemeyer.................................   154
    Written responses to questions for the record from 
      Representative McAdams.....................................   156


                    THE COMMUNITY REINVESTMENT ACT:

                       IS THE OCC UNDERMINING THE

                       LAW'S PURPOSE AND INTENT?

                              ----------                              


                      Wednesday, January 29, 2020

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Velazquez, 
Sherman, Meeks, Clay, Scott, Green, Cleaver, Perlmutter, Himes, 
Foster, Beatty, Vargas, Gottheimer, Lawson, Tlaib, Porter, 
Axne, Casten, Pressley, McAdams, Ocasio-Cortez, Wexton, Lynch, 
Adams, Dean, Garcia of Illinois, Phillips; McHenry, Wagner, 
Lucas, Posey, Luetkemeyer, Huizenga, Barr, Tipton, Williams, 
Hill, Zeldin, Loudermilk, Budd, Kustoff, Hollingsworth, 
Gonzalez of Ohio, Rose, Steil, Gooden, Riggleman, Timmons, and 
Taylor.
    Chairwoman Waters. The Committee on Financial Services will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``The Community Reinvestment 
Act: Is the OCC Undermining the Law's Purpose and Intent?''
    I now recognize myself for 4 minutes to give an opening 
statement.
    Today, this committee convenes for a hearing to conduct 
oversight of the Office of the Comptroller of the Currency 
(OCC), including a review of its approach to overhauling the 
Community Reinvestment Act (CRA).
    Comptroller Otting, welcome back. I am pleased that this 
committee will finally be able to hear from you after you 
missed our last hearing in December.
    The Community Reinvestment Act is an important law that was 
enacted to combat redlining and to ensure that banks make 
responsible investments in the communities where they are 
chartered. Unfortunately, the OCC has put forth a rule that 
runs contrary to the purpose of the CRA and would lead to 
widespread bank disinvestment from low- and moderate-income 
communities throughout the country.
    Comptroller Otting's proposal, which closely follows the 
recommendations made by his former bank colleague and now 
Secretary of the Treasury, Steven Mnuchin, would allow banks to 
skate by and do the bare minimum for a passing grade. Banks 
would claim CRA credit for investing in sports stadiums and 
bridges to nowhere. It would also allow banks to earn failing 
grades in nearly half of their CRA assessment races and still 
pass their overall CRA exam.
    Any serious update to the CRA regulations would set out to 
strengthen the law. Comptroller Otting's proposal instead does 
the opposite. Under Comptroller Otting, the Community 
Reinvestment Act would become the ``Community Disinvestment 
Act.'' Such a radical change to the CRA demands a heightened 
level of public scrutiny. Comptroller Otting appears determined 
to push this through as quickly as possible. The Comptroller is 
only allowing for a 60-day comment period, which will expire in 
early March. This is simply unacceptable.
    Before the proposal was released, all 34 Democrats on this 
committee wrote to Comptroller Otting and other bank 
regulators, calling on them to, at a minimum, provide a public 
comment period of at least 120 days for any proposal reforming 
the CRA. Since that time, community banks and others have also 
asked for a 120-day comment period. In the past, the OCC has 
provided 120 days, if not longer, for the public to comment on 
bank capital rules, and there is no reason why this important 
CRA rule should be treated any differently.
    Of course, no one should be surprised. Prior to assuming 
their respective government roles, Comptroller Otting and 
Secretary Mnuchin served as CEO, and chairman of the board, 
respectively, at OneWest Bank, which the Federal Government 
alleges was engaged in redlining. It has also been widely 
reported that when Mr. Otting was at the helm, OneWest 
attempted to game the public comment process when the bank was 
applying to merge with CIT bank. A 2018 media investigation 
uncovered hundreds of fake comment letters on the merger with 
texts originating from OneWest.
    There are other issues I am also concerned about, including 
the OCC's efforts to deregulate megabanks, and its actions to 
greenlight rent-a-bank schemes that allow lenders to skirt 
State usury laws.
    I look forward to hearing from Comptroller Otting today.
    The Chair now recognizes the ranking member of the 
committee, the gentleman from North Carolina, Mr. McHenry, for 
4 minutes for an opening statement.
    Mr. McHenry. Thank you, Chairwoman Waters. And thank you, 
Comptroller Otting, for being here.
    I would like to take a moment to first recognize the newest 
member of our committee, Congressman Van Taylor, of Plano, 
Texas. Van, we welcome you to the committee, and I will also 
counsel you that not all hearings are quite as interesting as 
this one.
    Isn't that right, Chairwoman Waters?
    But, we thank you. I know that we have quite a Texas 
contingent here on the committee, so I won't make any Texas 
jokes.
    With that, Comptroller Otting, I applaud you and FDIC Chair 
McWilliams for your efforts to reform and modernize the 
Community Reinvestment Act. This has been a long time coming. 
It has been 40 years since the CRA was enacted, and a lot has 
changed in the banking industry, much of it driven by 
technology. The rise of mobile and online banking helps more 
consumers in communities that the CRA was intended to serve, 
and this proposal takes those developments into account in the 
changing nature of banking.
    The current CRA regulations are outdated and 
technologically ineffective. It is an analog approach to a 
digital world. That needs to change. Your proposal moves this 
in the right direction. The FDIC and OCC's proposal seeks to 
modernize the CRA and ensure that it meets the current needs of 
communities and financial institutions alike. The proposal 
update will increase the transparency and objectivity that is 
currently lacking in CRA examinations today and will increase 
the effectiveness of the statute generally.
    We can no longer measure a bank's commitment to its 
community based off the number of physical branches it has. 
While branch banking remains important and remains an important 
part of serving customers, there has been a significant growth 
in the demand for digital banking services, especially in the 
post-crisis era. As demographics shift, and millennial 
customers become more essential to a financial institution's 
long-term viability, the demand for financial technology 
increases.
    Today, there is a growing focus on a refined online and 
mobile banking model that incorporates sophisticated data 
collection capability to deliver more personalized and engaging 
experiences. As banks' lending presence expands beyond their 
physical locations because of technology, we need to ensure 
that our regulation also involves and evolves that changing 
nature.
    These reforms, addressed in the CRA review, will address 
CRA hotspots by encouraging internet-only banks, such as those 
headquartered in Salt Lake City, Utah; Wilmington, Delaware; or 
Sioux City, South Dakota; to push portions of their CRA 
activities to where they take deposits, including communities 
that need them the most.
    In fact, in 2019, according to a survey conducted by the 
American Bankers Association entitled, ``How Americans Bank,'' 
online mobile banking methods are used most often. 
Approximately 73 percent of consumers prefer financial services 
provided to them digitally, compared to 17 percent who prefer 
going to a branch, or 6 percent who use ATMs, or 3 percent who 
bank over the phone, or 1 percent who bank through the mail. I 
would like to know who those 1 percent are.
    Digital transformation is one of the top trends in the 
retail banking industry. Retail banks understand the power of 
fintech and how essential it is to their success. They realize 
that going digital is more than a marketing strategy. It is a 
fundamental shift.
    So, I am encouraged by the CRA proposal and what it will do 
to more effectively help low- and moderate-income consumers and 
communities. I look forward to the hearing today. I thank you 
for your testimony, and I look forward to the questions.
    Chairwoman Waters. The Chair now recognizes the Chair of 
our Subcommittee on Consumer Protection and Financial 
Institutions, Mr. Meeks, for 1 minute.
    Mr. Meeks. Thank you, Chairwoman Waters.
    Comptroller Otting, the CRA was a civil rights bill meant 
to address the legacy of redlining and discrimination in 
banking, and today there is still ample evidence of continued 
redlining, banking deserts, and asymmetrical access to 
mortgages and loans for low- and moderate-income communities 
and communities of color.
    But your proposal decouples CRA from outcomes for intended 
communities, discounts the value of direct lending and 
mortgages to low- and moderate-income communities and 
communities of color, cuts out community organizations that 
work directly with these targeted communities, and is just not 
supported by data. In fact, your proposal is so flawed that 
covered banks are telling us that they see it as a very bad 
rulemaking that may be unworkable, and that undermines their 
CRA work. Fintech banks are telling us it is completely flawed 
and demonstrates a failed understanding of how their business 
models work, and community groups say it is a betrayal of the 
original intent of CRA.
    So, I say congratulations on one thing: you have unified 
them all.
    I yield back.
    Chairwoman Waters. The Chair now recognizes the ranking 
member of the subcommittee, Mr. Luetkemeyer, for 1 minute.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    Today, we are here to discuss the Community Reinvestment 
Act, and I stress the word ``Community,'' because not only do 
we look at investing in homes and that sort of thing, we also 
look at investing in communities. I think this is where we need 
to look at the changes that are being made here and how 
important they are to the financial services industry from the 
standpoint that getting credit for a bank, and helping churches 
and hospitals and schools and small businesses that provide 
jobs for these communities, is vitally important to be able to 
have a community that has the services where people want to 
live and jobs where they want to live. So, I thank the 
Comptroller for his hard work, and the FDIC for working with 
him to modernize and clarify the CRA.
    Also, in the past, this law has been used to beat banks 
over the head and has been used inappropriately, and I think he 
addresses some of these things. The proposal is not perfect, 
and I think anybody who wants to make some suggestions should 
quit throwing rocks and start doing things in a productive way 
by suggesting positive solutions.
    With that, Mr. Otting, thank you for being here today. I 
look forward to the questions.
    Chairwoman Waters. I want to welcome today's witness, Mr. 
Joseph M. Otting, the Comptroller of the Currency. Mr. Otting 
has served in his current position since 2017. Prior to his 
appointment, Mr. Otting served as CEO of OneWest before its 
acquisition by CIT and served briefly as its leader. Mr. Otting 
has testified before the committee previously, and I believe he 
needs no further introduction.
    Comptroller Otting, without objection, your written 
statement will be made a part of the record. You will have 5 
minutes to summarize your testimony. When you have 1 minute 
remaining, a yellow light will appear. At that time, I would 
ask you to wrap up your testimony so we can be respectful of 
the committee members' time.
    Comptroller Otting, you are now recognized for 5 minutes to 
present your oral testimony.

STATEMENT OF THE HONORABLE JOSEPH M. OTTING, COMPTROLLER OF THE 
   CURRENCY, OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

    Mr. Otting. Thank you.
    And good morning, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee.
    Allow me to reintroduce myself to the committee. I was born 
in Maquoketa, Iowa, a city of 6,000. As of 2017, Maquoketa had 
a 19-percent poverty rate and a median household income of 
$46,000. In Maquoketa, Clinton Machine Company manufactured 
small engines and, by 1956, became the 10th largest employer in 
Iowa. By 1999, there were only 35 employees left, and my 
hometown's largest employer closed its doors. The farm crisis 
of the 1980s further devastated the community and forced the 
closing of downtown businesses, which was further influenced by 
a recession.
    I have seen firsthand what happens to farming communities 
when large businesses shut down and small and family farms do 
not have access to credit. My first banking job took me to 
California in 1981. I was fortunate to meet my wife, Bonnie, at 
another bank. She is a second-generation Hispanic-American of 
Mexican descent, born and raised in east Los Angeles. My 
father-in-law labored at a factory and worked hard to support 
his family.
    When I talk about low- and moderate-income communities, I 
am not talking about some esoteric concept. On the contrary, I 
am talking about an area where I grew up, America's rural 
farmland, and an area where my wife grew up, east Los Angeles. 
Because I know and care about these communities, it is my 
intent to strengthen CRA, not weaken it.
    During my banking career, I saw firsthand how CRA can be 
improved. The goal for improving CRA rules is very clear: to 
encourage banks to do more. I am confident that this proposal 
can achieve that goal by making four basic improvements: 
clarify what counts; clarify where it counts; measure CRA 
performance objectively; and make reporting transparent and 
timely.
    I would like to walk you through the process that led to 
this proposal.
    This proposal was informed by agencies' Economic Growth and 
Regulatory Paperwork Reduction Act (EGRPRA) reports to Congress 
in 2007 and 2017, public hearings 10 years ago, recommendations 
published by the Treasury Department in 2018, extensive 
feedback gathered through meetings and tours involving 
thousands, and more than 1,500 comments in response to our 
Advance Notice of Proposed Rulemaking (ANPR) in August of 2018. 
I have personally read each of the 1,500 comments received in 
the ANPR. This has been a lengthy and transparent process and 
has been consistent with the letter and the spirit of the 
Administrative Procedure Act (APA).
    All of this work resulted in feedback supporting CRA 
modernization, with 94 percent of ANPR respondents saying that 
CRA lacks objectivity, transparency, and fairness; 98 percent 
think the rules are implied inconsistency; and 88 percent say 
the framework is hard to understand.
    Let me describe what the proposal does not do, because 
there is a lot of misunderstanding about its intent. One of the 
key claims against the proposal is that it would permit 
redlining. This is blatantly false. Nothing in this proposal 
changes the agency's authority to enforce fair lending laws to 
prevent discrimination and redlining. The regulations 
implementing the Fair Housing Act and the Equal Credit 
Opportunity Act (ECOA) prohibit discrimination and redlining. 
These regulations are not changed in any way by this proposal.
    The next erroneous assertion is that the proposal contains 
a single metric to create a bank's CRA rating. That, too, is 
incorrect. The proposal would require examiners to use a retail 
lending test for each major type of product, identical to that 
described in Governor Brainard's speech.
    In addition, examiners would evaluate the impact of a 
bank's CRA activity by measuring the dollar value of that 
activity in each assessment area and at the overall bank. Then, 
examiners would apply discretion in considering performance 
context to assign a final rating. For regional banks, that 
would involve hundreds of measures, and for larger banks, it 
would involve thousands, with no single metric.
    Another assertion is that the proposal does not faithfully 
implement the statute. On the contrary, each of the activities 
listed in the proposal would directly satisfy the statute's 
purpose. More of the proposal closes loopholes that exist today 
by granting CRA credit to loans for wealthy people who buy 
homes in low- to moderate-income (LMI) areas.
    Another erroneous assertion is that the proposal would take 
away the incentive banks have to maintain branches. In fact, 
this will be the first time in the regulation where a bank will 
be rewarded for maintaining LMI branches.
    Another misinterpretation is that a bank could receive a 
CRA rating even if it fails to have a satisfactory rating in 
half of its assessment areas. The proposal specifically asks 
what thresholds should be used, including whether that 
threshold should be as high as 80 percent.
    And, lastly, let me address the issue of sports stadiums 
qualifying for CRA, which has been very topical. Under the 
current law, banks have received credit for financing sports 
stadiums since 1993, and other renewal projects in LMI 
communities. This is not new. That is a false statement. The 
proposal would not change that, but we are open to comments.
    What this proposal does is to clarify the approach by 
providing, for the first time since 1977, a list for 
communities and banks to understand what qualifies for CRA.
    My only ask of those interested in commenting on the merits 
of the proposal is to actually read the proposal and not rely 
on sound bites. These issues are too important to be debated 
based on sound bites.
    Thank you for this opportunity.
    [The prepared statement of Comptroller Otting can be found 
on page 70 of the appendix.]
    Chairwoman Waters. Thank you very much. I now recognize 
myself for 5 minutes for questions.
    Let me just get right to the first point. Your proposal 
only provides a 60-day comment period for stakeholders to 
review the proposal of the CRA, and we have all asked you if 
you would extend that for 120 days for review. What have you 
decided?
    Mr. Otting. We have decided that we will not extend that 
date.
    And as a point of clarification for you, we published that 
document on December 9th, and by the conclusion, on March 9th, 
that will be 88 days.
    Chairwoman Waters. Is it true that in the past, the OCC has 
provided a 120-day comment period on important bank capital 
rules?
    Mr. Otting. I don't know the answer to that, but the vast 
majority of comments--
    Chairwoman Waters. Do you consider this to be a very 
important proposal--very, very important, given that you are 
making significant changes to CRA? Do you consider it very 
important?
    Mr. Otting. I do consider it very important.
    Chairwoman Waters. But you don't consider it important 
enough to have a 120-day comment period?
    Mr. Otting. Sixty days and the regtech should be able to be 
understood by people.
    Chairwoman Waters. Okay. So, you have decided that you are 
not going to do that.
    Mr. Otting. That is correct.
    Chairwoman Waters. I am concerned that under your plan, 
banks that get a failing grade in up to 50 percent of their 
assessment areas would still pass their overall CRA 
examination. Is that right?
    Mr. Otting. That is not correct.
    Chairwoman Waters. Okay. And you plan to stick with that?
    Mr. Otting. That is not correct, as I said.
    Chairwoman Waters. It is not correct?
    Mr. Otting. That is correct, ma'am.
    Chairwoman Waters. Fifty percent.
    Mr. Otting. It is not correct.
    Chairwoman Waters. Then, correct me.
    Mr. Otting. Today, as an example, a regional bank that has 
276 assessment areas, the banks currently evaluate only--we, as 
regulators, evaluate 40. That is about 15 percent. We are 
proposing that we evaluate all 276 going forward. We asked the 
question: Should we allow 50 percent of the assessment areas to 
pass or 80 percent? We are looking for feedback and comment 
from the communities and the banks on that issue.
    Chairwoman Waters. Thank you very much.
    Have you been able to reconcile the differences with the 
Federal Reserve (Fed)?
    Mr. Otting. With whom?
    Chairwoman Waters. With the Fed.
    Mr. Otting. We haven't been able to reconcile the 
differences with the Fed--
    Chairwoman Waters. So, they are still opposed to your 
proposal?
    Mr. Otting. I don't know if they are opposed. Governor Lael 
Brainard--
    Chairwoman Waters. Do they support your proposal?
    Mr. Otting. Governor Lael Brainard--
    Chairwoman Waters. Do you know that they do not support 
your proposal?
    Mr. Otting. Governor Lael Brainard did not sign onto the 
proposal.
    Chairwoman Waters. Okay. I am worried that your proposal 
dilutes the focus of the CRA on meaningful investments in low- 
and-moderate-income communities. For example, under the new 
proposal--and you alluded to this--athletic stadiums located in 
low-income community tracts in Opportunity Zones would 
explicitly be CRA-eligible with little regard for how LMI 
communities would be helped. Is that correct?
    Mr. Otting. Since 1993, CRA has allowed sports facilities 
to be included in CRA. We have put it out for comment to get 
feedback, and the most important thing is--
    Chairwoman Waters. So you don't think that should be 
changed at all?
    Mr. Otting. The most important thing is we produced a list 
of 200 items, and the whole point of producing that list was to 
gain feedback through this process about what people thought 
was effective and not--
    Chairwoman Waters. Okay.
    Your plan is also bad for rural areas, as a loan to a 
family farm with gross annual revenues of $10 million would 
qualify as a CRA. According to the USDA, only about 1 percent 
of farms had sales of $5 million or more, let alone the $10 
million you proposed. Therefore, it seems like this approach 
would divert lending away from small family farms. Are you 
aware of that?
    Mr. Otting. I am aware. I don't think the $10 million is a 
correct number. What we have done is we have raised it from 
$500,000 to $2 million for family farm owners.
    Chairwoman Waters. Okay. So, Mr. Otting, basically, you 
have decided that you know best about everything that has to do 
with CRA reform. You do not wish to work with us. We came to 
the board meeting over at the FDIC, and we let our position be 
known, in addition to all of the letters and the work that the 
advocates have been doing, but you have decided you will work 
with no one, that this is your proposal, this is what you want, 
and this is what we get. Forget about the Congress of the 
United States or anybody else; you know better than anybody 
else.
    We told you about what it takes in minority communities and 
why CRA is so important. We told you about discrimination. You 
said you had personally never observed it. Do you still 
maintain that you don't know about discrimination?
    Mr. Otting. I didn't say I don't know about it.
    Chairwoman Waters. You said you had never observed it. Is 
that right?
    Mr. Otting. I said I had personally never observed it--
    Chairwoman Waters. Okay. Do you still--
    Mr. Otting. But in conjunction with that quote--
    Chairwoman Waters. Do you stick with that, that--
    Mr. Otting. --advised me that--
    Chairwoman Waters. --you have never observed 
discrimination?
    Mr. Otting. Please let me respond to your question.
    Chairwoman Waters. Is that correct?
    Mr. Otting. Let me respond to your question.
    Chairwoman Waters. You have never observed it?
    Mr. Otting. I have not personally observed it, but my 
family has.
    Chairwoman Waters. In all of the work that you did with 
OneWest Bank--
    Mr. Otting. Can I personally answer? Can I answer your 
question?
    Chairwoman Waters. --you have never, ever, observed 
discrimination, is that right?
    Mr. Otting. I have personally never observed it, but I 
would say that I know it happens in America. My family has told 
me it happens. My friends have told me it happens. In my 
professional capacity as Comptroller, I have observed it 
occurring--
    Chairwoman Waters. Thank you very much, but my time is up, 
and I am so pleased that your family told you about it, and 
today, I am telling you about it.
    Thank you very much.
    Mr. Otting. Thank you.
    Chairwoman Waters. I will now recognize the ranking member, 
the gentleman from North Carolina, Mr. McHenry.
    Mr. McHenry. Comptroller Otting, thank you for being here 
today. The Community Reinvestment Act was passed in 1977. When 
was the last time it was updated, that we had a major 
regulatory update to the CRA?
    Mr. Otting. It was created in 1977, and last updated in 
1995.
    Mr. McHenry. In 1995.
    Mr. Otting. Yes.
    Mr. McHenry. Has much changed in banking since 1995?
    Mr. Otting. Significantly. Originally, when the statute was 
passed, we didn't have interstate banking. No one could even 
conceptualize of internet banking or mail banking where people 
are more and more not going into a branch now and are seeking 
financial services via the internet.
    Mr. McHenry. Half the number of community banks, less than 
half the number of banks in America than we did in 1995. That 
is number one.
    Mr. Otting. That is correct.
    Mr. McHenry. Do we have more branches or fewer branches 
over the last 25 years?
    Mr. Otting. Substantially fewer.
    Mr. McHenry. Okay. But CRA is designed around physical 
infrastructure, according to the 1995 regulation. Is that 
right?
    Mr. Otting. That is correct.
    Mr. McHenry. So what does that mean? What does that 
actually mean? Say, you have a bank that is mainly an internet 
bank, headquartered in Salt Lake City, and they do 10 percent 
of their business in a State like New York or California. Where 
do they spend their CRA credits?
    Mr. Otting. They spend their money in Salt Lake City.
    Mr. McHenry. Why?
    Mr. Otting. Because that is where their assessment area is 
domiciled because it is considered to be their headquarters.
    Mr. McHenry. That is not where their business is, though.
    Mr. Otting. That is not.
    Mr. McHenry. Okay. So how have they changed these 
regulations?
    Mr. Otting. We are changing the regulation so that if an 
institute gathers more than 50 percent of their deposits 
outside their assessment area, those that have 5 percent or 
more would be deemed assessment areas. With one particular 
entity in Salt Lack City, 8 percent of deposits are in Los 
Angeles, 5 percent are in Dallas, and 12 percent are in New 
York. Those will be deemed assessment areas, and dollars will 
flow into those communities that aren't flowing there today.
    Mr. McHenry. So this is mainly a rewrite about technology 
and a dramatically changed footprint for banking?
    Mr. Otting. One component of it, yes.
    Mr. McHenry. What are the other components?
    Mr. Otting. We are giving people identification of what 
actually qualifies for CRA. There has never been a list 
produced. We are actually focusing banks to do a hundred 
percent of their assessment areas today, and so, instead of 
doing a portion of it, we will look at a hundred percent of 
their assessment areas. And we are giving them an objective way 
not only for community groups, civil rights groups, and banks 
to be able to measure those institutions on their performance 
in the markets to which they--
    Mr. McHenry. How long have you been the Comptroller?
    Mr. Otting. I have been the Comptroller for about 2\1/2\ 
years.
    Mr. McHenry. Okay. And has the OCC, the FDIC, and the Fed 
had a conversation just because of the last 2\1/2\ years? How 
long is this--
    Mr. Otting. It has been going on for 10 years. The 
statistics, as we quoted--over 90 percent of the people feel it 
is outdated, it doesn't give clarity, and it doesn't give 
measurement techniques. It has been screaming out to fix this 
for 10 years, and people haven't taken action.
    Mr. McHenry. The joint rulemaking is between the OCC and 
the FDIC, is that correct?
    Mr. Otting. On this particular rule, correct.
    Mr. McHenry. Okay. On this particular rule.
    And in terms of regulation, what part of the Federal 
banking footprint does that cover for CRA?
    Mr. Otting. For CRA, it covers 85 percent.
    Mr. McHenry. Eighty-five percent.
    Mr. Otting. Eighty-five percent of all assets covered under 
CRA are covered by the OCC and the FDIC.
    Mr. McHenry. Okay. But the FDIC has that remaining less 
than 15 percent?
    Mr. Otting. The Federal Reserve has the remaining 15 
percent.
    Mr. McHenry. I'm sorry, the Federal Reserve. I misspoke.
    So, along this process over the last 2\1/2\ years of your 
undertaking, have you engaged with the Federal Reserve?
    Mr. Otting. Thousands of times.
    Mr. McHenry. Okay. Have you and your team incorporated the 
Federal Reserve's feedback and perspective in this proposed 
rule?
    Mr. Otting. Not only did we incorporate it, we actually 
made a big component of it, of the framework that the Federal 
Reserve actually came up with. We thought it was good. In the 
individual assessment areas that will look at a bank's 
performance in low- to moderate-income by numbers, we will 
compare that to the low- to moderate-income population and then 
the overall low- to moderate-income lending in that market, and 
a bank would have to meet certain standards. That was strictly 
the Fed. We had a different way at the OCC of how to approach 
that and, because of their thought process, we integrated that 
into the Notice of Proposed Rulemaking (NPR).
    Mr. McHenry. Right. So you are covering 85 percent. You 
have given a great deal of clarity in this rulemaking on what 
qualifies for CRA credit. So not only would you do what you 
must do in terms of regulation, but also the measurement by 
which you will be held to account. So this is a great deal 
about regulatory certainty, is it not?
    Mr. Otting. It is.
    Mr. McHenry. Okay. Thank you for your testimony. Thank you 
for your openness in this process. Thank you for hearing this 
feedback. And I thank you and the career staff, especially, for 
being measured about this proposal.
    Mr. Otting. Thank you.
    Chairwoman Waters. The gentlewoman from New York, Ms. 
Velazquez, is recognized for 5 minutes.
    Ms. Velazquez. Good morning, sir. Thank you for being here.
    I would like to follow the line of questioning of the 
Chair, and I would like to ask you: Do you commit to delaying 
your proposal until CRA advocates and consumer groups feel 
their voices have been sufficiently heard and the Fed has also 
agreed to sign on?
    Mr. Otting. I do not.
    Ms. Velazquez. Comptroller Otting, CRA stakeholders have 
stated that commenting on the OCC and the FDIC's proposal is 
difficult due to the lack of data and analysis found in the 
proposal, particularly as it relates to the threshold for 
measuring CRA performance.
    What do you say to that?
    Mr. Otting. Do you know how the data is currently compiled 
in CRA?
    Ms. Velazquez. No, I do not.
    So that we can have a better understanding, not only the 
members of this committee but the communities that we 
represent, particularly my communities, would you share the 
underlying data that was used and what analysis was conducted 
in developing this performance threshold?
    Mr. Otting. It is important to note--I asked you the 
question--
    Ms. Velazquez. I am asking a yes-or-no question. Would you 
share with this committee?
    Mr. Otting. You have to understand that there is no data 
today. You have to go individual PE by PE. There are 6,000 of 
them. The Fed went through those. We went through those and 
pulled that data together. The information you are asking--
    Ms. Velazquez. I am asking specifically for the data on the 
rule.
    Mr. Otting. Some of the information comes from the Federal 
Financial Institutions Examination Council (FFIEC), which is 
not public information.
    Ms. Velazquez. Why isn't it?
    Mr. Otting. Because it is confidential supervisory 
information.
    Ms. Velazquez. So what type of analysis was conducted to 
measure the proposal's input on CRA lending and investment in 
LMI communities? Can that analysis be shared with this 
committee?
    Mr. Otting. When we look at a bank's performance in CRA, we 
look at small business lending, farm lending. We look at the 
HMDA data that they do the residential mortgage lending, and 
then we look at the community development, and we try to make 
an assessment on our new proposal. What do they have on their 
balance sheet in relationship to their deposits? We have done 
that analysis. We think that is what got us to get 
directionally correct on the outstanding satisfactory level, 
and now we have gone out from the banks to request that 
information to validate that.
    I would be happy to come by your office once we get that 
data and that analysis completed, but it is not something we 
would put out for public distribution.
    Ms. Velazquez. Madam Chairwoman, I agree with everything 
that you have stated before, and I believe that we should 
request the data and analysis used to create this rule and, if 
not, if they don't want to share it willingly so that we can do 
our job, then we should subpoena such information.
    Chairwoman Waters. Will the gentlewoman yield?
    Ms. Velazquez. Yes.
    Chairwoman Waters. Thank you very much.
    I don't think that Mr. Otting is serious about his 
willingness to cooperate with us. As I said before, I think he 
believes that he knows better than any of us and he does not 
have to work with the Members of Congress. You are absolutely 
correct. If we have to subpoena the information, we will do 
that.
    Comptroller, while I believe the CRA must help provide more 
funding for community development projects like public housing, 
I am very concerned that the single-metric evaluation measure 
included in your proposal will lead to a substantial dilution 
of all of the core CRA requirements, and will enable banks to 
focus on only a small number of large, easy projects to meet 
their CRA responsibilities.
    What safeguards are included in your proposal to ensure 
this will not happen?
    Mr. Otting. For every individual assessment area, we will 
look at the actual volume of units that institution completed, 
we will look at the volume of units that the competition had 
done, and we will look at the population of low- to moderate-
income, and there is a criteria to which they have to do to 
meet a satisfactory level. So, it is impossible, absolutely 
impossible, to do what you described.
    Ms. Velazquez. That is not what the CRA experts who came 
before this committee stated, and that is why it is so--
    Mr. Otting. It is impossible.
    Ms. Velazquez. I control the time. That is why it is so 
important that you expand the time to 120 days.
    Thank you. I yield back.
    Chairwoman Waters. The gentleman from Missouri, Mr. 
Luetkemeyer, is recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    And I certainly am disappointed that we allow the integrity 
of the witness to be questioned. I think it is below the 
comportment of this committee. I think the gentlelady from New 
York should be called out for something like that, but I will 
move on.
    Mr. Otting, thank you for being here this morning. I am 
probably one of the two guys on this committee who has actually 
filled out a CRA report. I did it many years when I was in the 
bank at home. I understand this does need some changes. It does 
need some reform. It is not a very good report from the 
standpoint of how it actually should measure the investments 
that banks make into the communities. It does not incentivize 
them the way it is presently structured, and especially not in 
today's world. So, thank you for what you are doing.
    I know one of the concerns that has been leveled this 
morning is that they think the rule is going to disincentivize 
mortgage lending in favor of community development. Now, I have 
a point to make, and then I want to you answer that question.
    This is the Community Reinvestment Act. It is not the 
housing investment act. I realize that the law was put in place 
to stop redlining, which is a laudable goal, and we should not 
allow that to happen, but it also was there to incentivize 
banks to invest in communities because communities are where 
people want to live, where they have services such as churches 
and schools and hospitals and community centers, and they want 
to have small businesses that can actually create jobs so they 
can live in a community where they want to work.
    So, if you don't have those businesses and services 
incentivized, you don't have the community. That is where I 
think the Community Reinvestment Act comes in. It wants to 
build a community and not just focus on housing, which is an 
important part of this, and if you want to weigh this--as I 
said in my testimony the other day--if you want to weigh it 
more heavily one way or the other, that is fine, but to 
restrict it only to that is totally misrepresenting the intent 
of what this law should be about.
    My question to you this morning, sir, is, how would you 
answer the question about how you believe that some of these 
folks believe that it disincentivizes mortgage lending in favor 
of community development loans?
    Mr. Otting. I don't believe it disincentivizes at all. As 
we traveled across the United States and talked to community 
groups and civil rights organizations and banks, we did not 
want to disrupt people's business models, the way they were 
serving their community. So, the claim that this will cause 
less mortgage lending, I don't think is valid.
    One of the things we did is we moved from units to on-
balance sheets so we could have an actual numerical measure 
against deposits with those financial institutions that did 
mortgage origination and sold it, so that we gave them credit, 
even if they held the mortgage for 1 day, for 90 days of 
credit. That is one of the open items that we are looking to 
get feedback on from the notice of proposed rulemaking.
    But I do agree with you that, if you really look at the 
actual results in the Community Reinvestment Act, the biggest 
component of the way institutions meet the needs of their 
communities is through small business lending. It isn't 
mortgages. It is actually small business lending.
    And similar to my community, Maquoketa, when we lost that 
big factory, families started to move out of the City and 
people had to drive 30 to 60 miles to get a job. It had a 
really negative impact on the social infrastructure of our 
community.
    Mr. Luetkemeyer. I thank you for the comment. It is 
interesting that the last person who testified or asked 
questions here is also the Chair of the Small Business 
Committee, and this is something that I would think would be 
right square in the middle of where she would like to be right 
now with you, to help you, to encourage you to continue to 
structure this thing so there is an incentive to put money into 
small businesses that can build communities. Seventy percent of 
the jobs in this country are provided by small businesses. That 
is where people want to live, where they can actually get a 
job.
    One of the things I have found as I have talked to a lot of 
other financial services folks around my district and the 
country was the fact that the previous Administration used this 
law to really beat the banks over the head with regards to 
trying to incentivize them and force them to do certain things 
that were actually against their own business model.
    Are you aware of that, and what have you done to stop that 
nonsense?
    Mr. Otting. I think, unfortunately, CRA has been used by 
certain organizations--when there is an event, a branch opening 
a new business, an acquisition or a merger, the uncertainty 
around the clarification about, is an entity in compliance with 
their CRA, often can be used by certain groups to extract 
economic dollars. I do think that by bringing clarity to this, 
a lot of that will be eliminated. Perhaps some of the groups 
that are protesting the loudest are recognizing that this 
clarity will be healthy for community groups, civil rights 
organizations, and the banks, but not so healthy for them.
    Mr. Luetkemeyer. Thank you for that this morning, and thank 
you for continuing to work hard on this. I think the clarity 
you are trying to bring to this is very, very much needed to be 
able to understand how banks can be incentivized and then given 
credit for developing the communities that they want to have 
people live in and work in. Thank you very much.
    And I yield back.
    Mr. Otting. Thank you.
    Chairwoman Waters. The gentleman from California, Mr. 
Sherman, who is also the Chair of our Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, is now 
recognized for 5 minutes.
    Mr. Sherman. Mr. Comptroller, in about a month or so we 
will have hearings on the London Interbank Offered Rate 
(LIBOR). In our private conversations, you have urged us to 
look at something other than the Secured Overnight Financing 
Rate (SOFR) so that we don't get a rate that goes down in times 
of fiscal crisis or downturn. I hope that you will be able to 
propose a rate that is based on real, verifiable transactions, 
not surveys.
    But while we will listen to you on LIBOR, it is distressing 
that you will not listen to Congress when it comes just to the 
timing of when you are going publish these rules. You are 
closing the book when we have asked. This is something I have 
never seen an agency do. It shows a contempt for this committee 
that is almost inconsistent with me listening to you on LIBOR 
or us listening to you on anything else.
    Now, it is my understanding that you have just recently 
reached out to a number of banks to request data to support 
your approach. If the OCC and the FDIC lack sufficient data to 
support the proposed rule, why are you hell-bent on adopting it 
on an expedited basis?
    Mr. Otting. Would you mind if I just clarify a point on the 
LIBOR really quick?
    Mr. Sherman. No, this is my time.
    Please respond to my question.
    Mr. Otting. We do not set the index. That will be set by 
the industry, but it has to be safe--
    Mr. Sherman. Again, please respond to my question.
    Mr. Otting. Is your question, why did we just recently 
reach out to banks for the data?
    Mr. Sherman. Yes, and knowing why do you want to adopt a 
rule on such a quick timetable when you still don't have the 
information.
    Mr. Otting. We do have the information. When we have gone 
out to the banks is, because they house the actual 
information--we could get it through other sources--to do a 
validation of the information that we pulled to make sure that 
it is accurate. That information--
    Mr. Sherman. You don't know whether it is accurate, but you 
are hell-bent on ignoring the request of this committee to 
extend--
    Mr. Otting. We wanted to do validation. So, that data 
request is supposed to be concluded by March 10th.
    Mr. Sherman. Let me continue. You are not willing to wait 
until you can work out something with the Fed, so you are going 
to end up with regulatory arbitrage. Some banks will be subject 
to one rule, and other banks will be subject to another rule.
    Has the Fed encouraged you to ignore the request of this 
committee for additional time to try get this rule right?
    Mr. Otting. We have been on a long journey. We have 
communicated our effort over the last 2 years with the 
direction we are going. Regarding regulatory arbitrage, I don't 
agree with that statement. We will control 85 percent of the 
CRA activity in the industry today. There are hundreds of 
billions of dollars that can flow into communities by, I think, 
completing this--
    Mr. Sherman. Right. Then if banks don't like your rule, 
they can go get themselves regulated by the Fed, or if they 
don't like the Fed's rule, they can rearrange their corporate 
structure to be regulated by you.
    Mr. Otting. Highly unlikely.
    Mr. Sherman. Highly unlikely. We will see.
    Now have you looked at the additional data that is going to 
have to be requested and the--
    Mr. Otting. This isn't additional data. It is the data we 
have. We are just asking them to give us the answers.
    Mr. Sherman. Once this rule goes into effect, if it were to 
go into effect in its present form, consumers would have to 
provide banks with, and banks would have to collect more, 
information. That is a hassle for consumers, it is a privacy 
concern for consumers, and it is a cost for banks.
    Has that been analyzed--
    Mr. Otting. That is an inaccurate statement. There would 
not be a requirement for any additional data from consumers, 
and banks have that data in-house already. They would have to 
reformat it.
    Mr. Sherman. There is no additional data collection?
    Mr. Otting. No. Additional data from the banks to the 
regulators but not from consumers to the banks.
    Mr. Sherman. And how would this rule apply to--would it 
reduce lenders' reliance on mortgages to meet CRA requirements?
    Mr. Otting. How would the rule apply to lenders designed to 
reduce--
    Mr. Sherman. And then will the effect of this rule be that 
banks try to comply with CRA, not by buying mortgages but by 
doing other things instead? What effect is this going to have 
on home lending?
    Mr. Otting. I think it is going to increase lending because 
those banks that just traded mortgage-backed securities or 
mortgage pools and got a hundred percent on the dollar credit 
for that will not be able to do that in the future. The little 
secret to CRA was that Bank A bought the mortgage pool, got 
credit, sold it to Bank B, got a hundred percent, sold it to 
Bank C, got a hundred percent, and sold it to Bank D. So, $4 of 
CRA credit was created--
    Chairwoman Waters. Your time has expired.
    Mr. Otting. --which is only $1.
    Mr. Sherman. My time has expired. I look forward to 
learning more about that.
    Mr. Otting. Thank you.
    Chairwoman Waters. The gentleman from Florida, Mr. Posey, 
is recognized for 5 minutes.
    Mr. Posey. Thank you, Madam Chairwoman.
    I join everyone here in welcoming you, and thanking you for 
your service. I commend you for taking on the daunting 
challenge of trying to modernize the evaluation of banks under 
the Community Reinvestment Act. I apologize for some of the 
uncivil behavior you have already experienced here and no doubt 
will continue to experience here. Unfortunately, that seems to 
be the new leadership standard in the House of Representatives.
    I notice you were cut off before you were allowed to answer 
questions that they asked you, and I would like to yield you 
time now, if you would like, to follow up on those.
    Mr. Otting. Thank you very much.
    I think it is clear that this proposal will increase the 
number of assessment areas where banks are measured. When you 
have additional measurement, that will increase additional 
dollars that will flow into assessment areas across America. At 
the top of the house of the banks we toured rural areas. We 
went to Indian Country. We have now allowed for family farms 
and for Indian Country to be included in CRA-related 
activities.
    At the OCC, we have a big initiative among minority 
depository institutions (MDIs)o. We clarified that minority 
depository institutions, both loaned by other banks and equity 
investments, can get CRA credit. I think, under Mr. Meeks' 
proposal, he is doing some great things, but I think if you 
really look at the minority depository institutions, they need 
capital flowing into those banks and this can allow that 
capital to come in. And we have also offered up instances where 
we will give a multiplier to those entities where we see 
certain items that we think that need to occur.
    So we are highly encouraged by being able to move this 
forward. It has been a long-term process, years in the making, 
and that is why we feel it is very important. For the 13 pages 
in the red text that anybody can't get through in the next 40 
days that we have left in the comment period, come over to the 
OCC, and Bao Nguyen or Grovetta Gardineer, who are seated 
behind me today, will sit down with them, as I will myself, and 
we can walk people through it. We are not asking for something 
unusual to get through this in the next 40 days.
    Mr. Posey. Thank you, and I appreciate those comments, and 
I am glad that you had time to make them.
    There is an old saying that says what doesn't get measured 
doesn't get done. I believe that completely, and you no doubt 
have already found in Washington, D.C., that people generally 
don't like accountability. The deep state has run this place 
for a long time. They have done it however they want to do it. 
It doesn't make any difference who is in charge, and now, there 
is a new sheriff in town, and you are one of the deputies, and 
I am deeply grateful to you for taking on the challenge and 
stepping up and actually trying to modernize this and make it 
measured. I think it will benefit everybody.
    Mr. Otting. That is right.
    Mr. Posey. Banking was used as a weapon against legal 
solvent businesses by the last Administration under the 
auspices of Operation Choke Point where, if the government 
didn't like your business, they told banks basically that they 
weren't allowed to do business with you, or they were going to 
be in big trouble with the OCC. I am sure you are familiar with 
that, and may have even been a victim of that at some time.
    Do you believe this is in violation of the Community 
Reinvestment Act?
    Mr. Otting. We have had a lot of dialogue on that, in 
regards to that, based upon a lot of letters from Congress 
about looking at, if an institution decides not to bank a 
particular industry, we have offered up to the banks that we do 
not feel you should isolate and eliminate different industries, 
but we also believe banks and boards have the ability to make 
those decisions.
    When you read the CRA, it says that the banks should serve 
the entire community to which they provide banking services, 
and so this is an area where, I will be honest with you, we are 
working our way through how to provide good guidance to banks 
on this issue.
    Mr. Posey. But do you think it was in violation of the 
Community Reinvestment Act?
    Mr. Otting. I don't necessarily feel, if I elect not to 
bank a particular company, that it is in violation of the 
Community Reinvestment Act.
    Mr. Posey. Okay. Although Operation Choke Point shouldn't 
be a functioning program any longer, I have had some 
constituent contacts who suggest that banks may choose to 
withdraw or withhold banking services including lending from 
services or businesses that, while completely legal, may not 
have found favor in certain political circles. I am told that 
the press calls this practice, ``de-risking.'' Can you explain 
the OCC's policy on such practices, also known as de-risking or 
de-selecting, as the case may be, and whether we have a policy 
in place to ensure that banking services are available to all 
legal businesses on equal terms?
    Mr. Otting. We encourage banks to bank legal businesses 
that operate within their community but do allow the 
institutions to make a decision on those particular entities 
that they bank.
    Mr. Posey. Thank you.
    Chairwoman Waters. The gentleman from New York, Mr. Meeks, 
who is also the Chair of our Subcommittee on Consumer 
Protection and Financial Institutions, is recognized for 5 
minutes.
    Mr. Meeks. Mr. Otting, do you know or do you believe that 
CRA came out of the civil rights bill?
    Mr. Otting. I believe CRA was intended to serve the entire 
community to which it is regulated, and I also believe it was 
intended to eliminate redlining within communities.
    Mr. Meeks. Do you know that it, in fact, came out of civil 
rights? In fact, if you look up the words--I have it right 
here--that it came out of the civil rights bill, which was 
passed in 1977.
    And so the question I have, just listening to you you talk 
about how you, yourself, have not seen or been a victim of or a 
part of discrimination, but you have talked to some other 
folks, but let me just say, it says right here: ``CRA laws 
passed to reduce discrimination in the credit and housing 
markets including what had passed the Fair Housing Act of 1968, 
the Equal Credit Opportunity Act of 1974, the Home Mortgage 
Disclosure Act of 1975, and that, in fact, that the home 
mortgage disclosure--that CRA seeks to ensure the provisions, 
the credit to all parts of the community, regardless of the 
negative wealth or poverty of the neighborhood.'' It was and is 
a civil rights bill.
    Now I am saying this to you because, if you are not 
affected by it at all, you have learned by some other folks, 
then I am telling you so you know what civil rights is and what 
it means to people of color in this country.
    The question then is, do you respect the people in the 
civil rights movement, the people in the civil rights 
organizations? Is that respected by them? Because with you, I 
want to put this into the record. Because what they have been 
asking for and what you have heard here from a number of 
individuals is asking for a longer period of time so that we 
can get this right, because it affects so many people, not just 
pushing a law on a 60-day period.
    I want to submit to the record three letters. The first is 
a joint trades letter from the Independent Community Bankers of 
America, the National Bankers Association, the National 
Association of Affordable Housing Lenders, and the Community 
Development Bankers Association. These groups combined 
represent a large part of majority of banks of all sizes in 
this country.
    And the letter says, ``We are, however, concerned, given 
the complexity of the proposed rule, that the current 60-day 
comment period is not an adequate amount of time to work with 
our members to analyze, assess, and understand how the rule 
will affect their operations and strategies for serving their 
communities.''
    And to this end, they respectfully ask for you to extend 
the date to allow for 120-day comment.
    Then, all of the members of this committee, bipartisan, 
sent you a letter, and I want to submit that for the record.
    And the third letter is your response, Mr. Otting. Your 
response, frankly, shows either a lack of respect for Congress 
or a lack of respect for those of us who believe in civil 
rights. It says, ``Because the 60-day comment period does not 
start until publication of the Federal Register, stakeholders 
will have in effect approximately 90 days to review and comment 
on the NPR.''
    That is outrageous, and it is completely disrespectful of 
individuals who would be affected by this, individuals who 
would be regulated by this. All of them say, ``I don't 
understand what the rush is.''
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Meeks. Thank you, Madam Chairwoman.
    What is the rush, what are you afraid of, or why don't you 
listen to the people who would be regulated by this and 
affected by this? We talk about home ownership in your 
proposal. Number one, let me just tell you something. In low- 
and moderate-income communities, particularly communities of 
color, the way you build wealth for those communities, the 
largest investment that they will make is in their mortgage. I 
wouldn't be here today but for the investment that my parents 
made in a mortgage that they then utilized so that I could get 
an education.
    And then, based upon this, the OCC's proposal, only 25 
percent of value of retail loans sold within 90 days of 
origination would be qualified for CRA, which means that it 
would become a disincentive for individuals in these 
communities to lend money in these communities to people of 
color and of low- and moderate-income, exactly the opposite of 
why CRA was created.
    It was to give more access for individuals to prevent 
redlining and to make sure folks can get into banks and 
incentivize banks to lend to people so they can get mortgages 
so they can create wealth for themselves and use that at times 
to create businesses and others.
    Your proposal and your lack of courtesy of extending to 120 
days discredits that. It shows disrespect.
    I yield back.
    Chairwoman Waters. The gentleman from Michigan, Mr. 
Huizenga, is recognized for 5 minutes.
    Mr. Huizenga. Thank you, and I appreciate you being here, 
Mr. Otting.
    I am trying to quickly look over the letter. I think my 
friend from New York just misspoke, not intentionally, but just 
misspoke. It is not a bipartisan letter. It is a bicameral 
letter. It is a letter that was sent.
    Mr. Meeks. That is correct.
    Mr. Huizenga. And I am reviewing your response. I fail to 
see the disrespect that you are showing directly from this 
letter, but, nonetheless, I do want to hear from you how you--I 
won't cut you off--are currently, and how you plan to in the 
future, receive input from the public, as well as Members of 
Congress and this committee.
    Mr. Otting. Thank you very much.
    As I have indicated in my open comments, this has been a 
long journey, specifically over the last 2 years. We did 
enormous outreach, traveling to communities across the United 
States, meeting with groups, sharing the framework of what we 
were looking to do, eliciting feedback. I will tell you that 
between the ANPR and the NPR, a lot of that feedback actually 
framed up to what we came forward with in the NPR.
    Mr. Huizenga. And that was how long of a process?
    Mr. Otting. We issued the ANPR in August of 2018, but we 
began way before the ANPR of going out to communities. Prior to 
that, there was a lot of dialogue going back 10 years within 
the agency.
    Mr. Huizenga. This isn't a surprise to anybody who has--
    Mr. Otting. No.
    Mr. Huizenga.--been involved.
    Mr. Otting. No. And we redirected based on a lot of that 
feedback about what the final product looks like, and it is 
also important to note that the term of 60 days gets used here. 
We actually produced on the internet of both the FDIC and the 
OCC on December 9th the document. It didn't get published 
through the Federal Register until January 9th, which was 28 
days.
    Mr. Huizenga. Yes.
    Mr. Otting. Actually, there is 88 days for people to be 
able to respond. After that period of time, we will take 60 to 
75 days to analyze the comments that we get and there will be a 
lot of outreach during that period of time as well.
    Mr. Huizenga. Including members of this committee, which 
I--
    Mr. Otting. Absolutely. I know most of you here. I have 
been up to your offices numerous time over the last 2 years. I 
would venture to say I have been to visit each of you at least 
twice. I think, every time I came to talk to you, I gave you an 
update on where we were on modernizing CRA.
    Mr. Huizenga. Okay. I appreciate that.
    I want to get to one thing at the very end about my 
district. I have a unique, I think, mix of both urban and 
extremely rural and, in fact, one of my counties, which has a 
sizable minority population, is the poorest county in the State 
of Michigan, and is, I think, in the top 60 poorest counties in 
the nation, so it's very difficult to have banking there. There 
are branches, and I commend those folks who run them for that 
outreach.
    But we know banking has changed, due to the internet 
predominantly, and I am curious if you could clarify how the 
proposal is going to deal with that, and how you are going to 
be tracking banks and giving them credit for where they are 
receiving their deposits and where their projects are?
    Mr. Otting. Sure. First of all, the branch network is still 
a critical component of U.S. banking, and so, by simplifying 
the rules of how it is measured, we won't have to do a small 
sample of the assessment areas across America. We will be able 
to look at every community, including your small communities, 
and see how the banks that are domiciled in those communities 
are supporting those communities.
    Today, in my example of 276 regional banks, we looked at 40 
of their assessment areas. We will look at all 276 going 
forward, and so your community--we will be able to determine 
what is going into that community from a CRA perspective. So, 
there will be more data available.
    Also as you talk about the evolution of banking going 
through the internet, those institutions that take more than 50 
percent of their deposits outside their assessment area will 
also be required to invest back into those communities because 
they will be deemed CRA assessment areas.
    Mr. Huizenga. Okay. In my last 30 seconds, do you fear 
that, without the Fed's support, financial institutions will be 
unduly burdened with additional and possibly competing CRA 
regulations?
    Mr. Otting. I'm sorry, could you repeat that?
    Mr. Huizenga. Do you fear that, without the Fed's support, 
there may be competing CRA regulations out there?
    Mr. Otting. I don't. We have thousands of rules, 
regulations, and guidance that differ amongst the agencies. So, 
no, I do not see it as an impediment at all.
    Mr. Huizenga. And with my remaining 5 seconds, I appreciate 
you being here, and the opportunity to continue this 
conversation.
    I yield back.
    Mr. Otting. Thank you very much.
    Chairwoman Waters. The gentleman from Georgia, Mr. Scott, 
is recognized for 5 minutes.
    Mr. Scott. Thank you very much, Madam Chairwoman.
    At the outset, Comptroller Otting, let me remind you that 
you are not the dictator of our financial system.
    The reason I say that is because your attitude reflects 
that. Our committee has had concerns raised to us from 
community activists about your rule, and you have expressed 
that those concerns don't matter. We have had requests for you 
to appear and discuss and lengthen the timeframe for these 
concerns. You said, ``No.'
    You have actually misspoken when you talked about the 
Federal Reserve. They were in here last month, and I 
specifically asked them, ``Where is Mr. Otting?'' Because you 
were the center of attraction when we were discussing that 
bill, and I was very concerned that you failed to show up at 
that hearing with the other regulators.
    Our financial system regulatory process is a collaborative 
effort, not just yours. We have had concerns from the very 
banks who are very much concerned, and don't even know how to 
follow this regulation.
    So when some from the other side talk about uncivil action, 
there is no uncivil action on our side. If there is any, it is 
you who are coming in here with an attitude that, ``It is my 
way or the highway.''
    Now, I am very concerned about one of the fundamental 
pieces of yours that impacts the very purpose for this Act. If 
it weren't for the civil rights movement, there would be no 
CRA. That is the pillar of this Act. And your rule violates the 
efforts of banks, and restricts their efforts to increase and 
supply adequate, affordable lending practices for the very 
people that the Act was passed to protect.
    When your proposal discounts loan origination in favor of 
balance sheet, that right there makes it more difficult for the 
community banks to serve and extend that help.
    And so I can't understand why you are doing what you are 
doing, when the entire community is asking, ``Why?'' The banks 
can't even figure out how to respond. People in the civil 
rights movement who gave their lives to have such a law placed 
on the books are asking why. The Federal Reserve, the FDIC, all 
of whom were here, were all trying to figure out why.
    So tell us, why are you acting in such a dictatorial way?
    Mr. Otting. Needless to say, I respect you very much, 
Congressman. I find somewhat appalling the comments that you 
made to me. I am doing it in the best interests of communities 
across America. I do believe that this will increase--
    Mr. Scott. But why haven't you responded? Why? Do you think 
everybody who has to implement this--
    Mr. Otting. How many years do you want this to go on?
    Mr. Scott. No, I don't. My concern is--
    Mr. Otting. I came to your office personally 3 times to 
walk you through this.
    Mr. Scott. I think you have. That is why I am so 
disappointed in you, because I am surprised.
    Mr. Otting. Yes, I have spent an enormous amount of time--
    Mr. Scott. It doesn't seem like you.
    Mr. Otting. Yes.
    Chairwoman Waters. The witness is requested to provide an 
answer in writing for the record.
    The gentleman's time has expired.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    And, Comptroller Otting, thank you for being here. I 
commend you for your work to modernize the Community 
Reinvestment Act.
    And I would ask my colleagues to follow the rules of 
decorum and not refer to you as a dictator. I think you are 
showing exemplary patience here today for someone who is 
totally following all of the rules and procedures under the 
Administrative Procedure Act. There is a comment period. You 
are following those rules. There is no dictatorial behavior 
here. You are just actually modernizing the CRA through the 
rules and the rulemaking process that is set forth in Federal 
law.
    And there is a comment period. Obviously, we have some of 
our colleagues who want to provide you some feedback on your 
proposal. They get that opportunity. You are following those 
rules.
    And let me just make the counterpoint that I think not only 
are you bringing the CRA into the 21st Century and modernizing 
it, making it more objective and less subjective for the 
lenders and the banks, but I think, more importantly, you are 
bringing the CRA into the 21st Century in a way that will much 
better help low- and moderate-income communities.
    And in Kentucky, that I have the privilege of representing, 
we have a lot of CRA deserts. We have a lot of rural 
communities that don't get investment because the CRA is stuck 
in 1977.
    We need what you are doing, because we need CRA to reflect 
the modern-day realities of low- and moderate-income 
communities that are not served by this outdated CRA. And you 
are doing a great job of bringing this into the 21st Century.
    Let me ask you this. I really think that the best 
innovation that you have done in this proposal is to clarify 
what counts. And you and I talked about this before.
    What I think is very, very important in this modernization 
in your proposal, is that banks who have suffered under a lack 
of transparency over the years, and they are understandably 
skeptical that regulators will be able to totally remove that 
subjectivity and guesswork as to whether an activity is CRA 
qualifying.
    So I want to ask you about that feature of the proposal 
that says that banks could have projects approved for CRA 
credit before they are being underwritten, contrary to the 
current model of approving loans and receiving CRA credit after 
the fact.
    Tell me, what assurances can you give banks and lenders 
that this proposal will, in fact, clarify in advance what 
activities will receive CRA credit and allow banks to solicit 
agency confirmation that an activity qualifies for CRA credit 
prior to engaging in that activity?
    Mr. Otting. Thank you, Congressman.
    First of all, one of the big challenges with CRA often is a 
bank is concerned about something qualifying, and so they had a 
tendency to just slide right to the middle of the Bell Curve 
and only do the most conservative things. And to be creative 
across America and really, I think, serve the low- to moderate-
income community, we want people to stretch and think of new 
ways to help that community with housing and jobs and 
activities.
    Mr. Barr. And how will that actually improve access to 
capital in low- and moderate-income communities?
    Mr. Otting. It will do two things. Because everybody around 
America will know what counts. And a lot of times, you find 
things being done in New York, that people didn't know about in 
Los Angeles, and things being done in Seattle, that they didn't 
know about in Chicago. So now, we have a list saying, here are 
all of the things that will qualify.
    Mr. Barr. I think that is huge. I think that is absolutely 
immensely beneficial to low- and moderate-income communities. 
Why on earth would there be criticism of this proposal that is 
going to invite more capital into low-income communities 
because banks and lenders are actually going to know in 
advance--
    Mr. Otting. That is right.
    Mr. Barr. --that this qualifies and this gets credit.
    That is a great innovation and I commend you for it, and 
everyone who cares about low- and moderate-income communities 
should applaud that.
    Let me ask you this. The Fed is not part of this. What are 
you doing to engage the Federal Financial Institutions 
Examination Council (FFIEC) to work with not just the Fed and 
your agencies and the FDIC, but also the State bank regulators, 
to make sure we have harmonization here?
    Mr. Otting. The ultimate goal was to bring this to one 
rule. We are still hopeful that as we progress this into a 
rule, that then the Fed can look at it, can observe how it is 
working, and then ultimately their choice could be they could 
adopt this or modify it.
    But I do think the choices would be stay on the current CRA 
plan or perhaps move into our plan or modify another plan. But 
I do not see regulatory arbitrage, I do not see confusion 
amongst the banks. Generally, the banks are looking for, from 
their primary regulator, what the rules and requirements are, 
and we think this brings tremendous--
    Mr. Barr. Is there any indication to date that the comments 
submitted in response to your rulemaking are anything other 
than authentic?
    Mr. Otting. There is not.
    Mr. Barr. And final point, and I made this--
    Mr. Otting. Can I take one question on that, Congressman?
    Mr. Barr. Sure.
    Mr. Otting. We don't know, because they can submit 
anonymous comments. We read them all and see do they have 
substance. It is not a numbers game. It is really the substance 
and the actionable items that come in those letters.
    Mr. Barr. Thank you. I yield back.
    Chairwoman Waters. The gentleman from Missouri, Mr. Clay, 
who is also the Chair of our Subcommittee on Housing, Community 
Development, and Insurance, is recognized for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman.
    And thank you, Mr. Otting, for being here today.
    The Great Recession had a disproportionate impact on 
communities of color. CRA and laws like it were meant to level 
the playing field for communities that face systemic 
discrimination and financial exclusion.
    CRA advocacy groups have argued that the OCC's one-ratio 
rule would dilute CRA activity in low- and moderate-income 
communities. Are you sensitive to these criticisms and willing 
to listen to all community and civil rights organizations to 
revise your approach?
    Mr. Otting. We have had a number of discussions with 
communities and civil rights organizations. Not everybody takes 
the same position as the one that you described.
    And, Congressman, it has been a few minutes, and I am happy 
to do it again, to talk about the fact that there is no one 
ratio in this proposal. That is a myth. It is inaccurate. The 
average regional bank will have 502 measurement points.
    So every community would be measured by units and dollars, 
and at the top of the house, it would be dollars. So that is a 
false statement. I am sorry that--I would be happy to come by 
and explain that to you if you would like.
    Mr. Clay. Okay. But, look, let's cut to the chase. The 
overall intent of your revisions--is it your intent to uplift 
these communities that have been locked out of the recovery, 
they have been locked out of economic activity altogether? What 
do you think the overall intent will be of your rule changes?
    Mr. Otting. Absolutely, Congressman. I have a strong belief 
that by clarifying what counts, clarifying where it counts, how 
the regulators are going to count it, will allow communities to 
attract dollars and capital into those communities. I wouldn't 
be taking this journey if it wasn't for that.
    Mr. Clay. Here is what the National Community Reinvestment 
Coalition (NCRC) has estimated, that relaxing CRA, like your 
proposal does, could lead to a potential loss of $52 billion to 
$105 billion in lending to low- and moderate-income communities 
over a 5-year period. And what do you say?
    Mr. Otting. I say that study was flawed because it made an 
assessment that 50 percent of the assessment areas would go 
away. So, I don't think that study is accurate.
    I also think NCRC is a biased organization. They receive 
money in mergers that they extract from the banks. And so, I 
don't think they can independently assess this rule.
    Mr. Clay. Here is what they say, that implementing your 
proposal, CRA rulemaking, shows a lack of concern for the 
potential loss of lending to low- and moderate-income and 
racial and ethnic minority communities. What do you say to 
that?
    Mr. Otting. I say we are closing the loopholes where high-
income people move into low- to moderate-income areas and get 
credit for those as mortgages today.
    Mr. Clay. Okay.
    Mr. Otting. And we are going back to the individual 
assessment areas. And so, every individual assessment area will 
have a measurement.
    Mr. Clay. How is that accurate, when we look at the 
constant steady decline of overall family wealth in communities 
of color, especially in the African-American community? Family 
wealth is one-tenth of white wealth in this country. How do we 
level that playing field through your changes?
    Mr. Otting. I think it is disturbing, that trend line on 
African-American home ownership in this country. We have met, 
Grovetta and I, with the Black REALTORS Association. There is 
work to be done there. We have to understand why that is 
occurring.
    Mr. Clay. Here is why it is occurring, because you never 
get a fair appraisal value, you never get extended credit for 
businesses or home mortgages. So they have to go into the 
predatory market. How do we stop that? And how does your rule 
address that?
    Mr. Otting. I am not sure that is covered under CRA 
exactly.
    Mr. Clay. It has a lot to do with CRA, by what banks 
actually do.
    Mr. Otting. Not the items you were describing.
    But you obviously have a passion for this. We have spent a 
fair amount of time on this as well. I would be happy to come 
over and spend some time with you. This is an issue we have to 
get fixed in America.
    Mr. Clay. We have never discussed this. You have never been 
up to my office, have you?
    Mr. Otting. Not to the best of my knowledge.
    Mr. Clay. I didn't think so. But thank you for your 
answers.
    I yield back.
    Chairwoman Waters. The gentleman from Colorado, Mr. Tipton, 
is recognized for 5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman.
    Comptroller Otting, I appreciate you taking the time to be 
here.
    And I am a little dismayed with some of the comments that 
have been made here today, with the word, ``dictator'' directed 
toward you, saying that you want to be able to restrict banks' 
ability to be able to make loans for the people that they are 
designed to serve.
    We had a letter that was passed out that was sent to you by 
some of our colleagues on the Democrat side.
    We would like, Madam Chairwoman, to be able to introduce 
that into the record with unanimous consent--
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Tipton. This letter does recognize what I hear you 
talking about, wanting to be able to move the CRA into the 
modern age, to be able to update something that is outdated, 
and to make sure that we are actually addressing some of the 
concerns in communities.
    And one thing that I would like to be able to highlight is, 
when we are talking about making out that menu of acceptable 
CRA activities for banks, you had included something that came 
out of some of our hearings: expanding broadband.
    In your opening statement, you talked about living in a 
rural area. That is my district. We talk an awful lot on this 
committee about the urban areas, and we should, in terms of 
creating some economic opportunity. But on a per capita basis, 
the impact that we feel in those rural communities when we see 
shrinking numbers of community banks being able to provide 
services into those areas, it is important that we remember 
that those people, those families, are important too.
    And I think a lot of what you are trying to be able to 
focus on, what we address in this letter, is to be able to make 
sure that we are actually achieving some of those goals in 
those local communities.
    But I want you to be able to maybe expand a little bit on 
some of the certainty that you can certainly create for the 
banks in terms of what they are going to be investing in, but 
also to speak about probably what is ultimately most important, 
what I hope we all agree on: helping the lives of the people 
who live in those communities through those investments.
    You have been cut off a few times. Would you like to be 
able to speak to that?
    Mr. Otting. No, I think the certainty around the list of 
what qualifies, it is amazing we have an Act that has been in 
place since 1977, and you could travel around and ask people 
and no one could tell you what actually qualifies for CRA.
    This was a joint effort between the FDIC, the Fed, and 
ourselves to come up with that list. It will be a living, 
breathing document, meaning that we will add to that list, and 
perhaps subtract from that list, if it is not meeting the needs 
of low- to moderate-income communities. But also the intake 
valves, so to speak, when there is a project that doesn't fit 
on that list, to get a pre-ruling about whether this is 
something that will benefit low- to moderate-income communities 
across America.
    I know your rural district. I have been over to see you 
many times. If you have seen banks shrink and consolidate, the 
assessment areas in rural America have gone away, this forces 
those banks to go back out into those communities where they 
have branches and support those local communities.
    But just as important on the top of the house, when a bank 
meets their assessment area requirements, they will then have 
fungible dollars that they can go to rural America and make 
those investments in things like you described, that can help 
those people continue on with the American Dream. So, I do 
think this is a really fundamental shift in the right direction 
for all of America.
    Mr. Tipton. And I appreciate that comment because this is a 
complex issue in terms of trying to be able to define the 
areas, what is going to actually be acceptable under the CRA.
    I can speak to a lot of the banks that I have talked to, 
investments that they would like to be able to make, 
investments that they have made that were not actually credited 
toward CRA, but they had a real commitment to be able to grow 
those communities and to be able to make sure.
    We have had a fair of amount of conversation in terms of 
the comment period. I noted in your response letter to the 
subcommittee chairman that you said you will continue to 
monitor the number of comments to determine if an extension is 
necessary later in the comment period.
    Would you like to speak to what you are doing to be able to 
lessen what you are getting back in some of those comments?
    Mr. Otting. Absolutely. We have 40 days left in the comment 
period. There are 13 pages in the red text that someone has to 
read through and understand. And we look for those comments to 
come in to add value.
    It is not a numbers game, meaning form letters, things like 
that. If they don't add substance to the comments with 
actionable items, we so note those and we so note what was 
covered.
    But we have already begun the process. I said I read the 
1,500 letters. Last week, there were 83 letters that had 
already been delivered. This morning, I found out there are 152 
letters. We are documenting, matrixing, identifying what is 
coming in, in those comment letters.
    So we can learn from those comment letters, things that can 
make this rule, I think, the best that it can be. I agree with 
you, this is a complex, emotional issue that requires a lot 
of--
    Chairwoman Waters. The gentleman's time has expired. The 
witness is requested to provide an answer in writing for the 
record.
    The gentleman from Illinois, Mr. Foster, is recognized for 
5 minutes.
    Mr. Foster. Comptroller Otting, I understand that you 
wanted to bring clarity and simplification to CRA evaluations, 
and I appreciate that. But I am a physicist, and there is a 
famous quote from Albert Einstein that says that things should 
be as simple as possible, but not simpler. Okay? And I think 
there is a danger here.
    One of the simple principles that you might consider adding 
to these is to reward the number of people helped and not 
simply the dollar volume delivered--also, the number of small 
businesses helped--that that should be an important part of any 
numerical metric you come up with.
    So, for example, if you go out into some rural area and you 
build a giant automated factory with no jobs, you haven't 
really helped any people, and that should not count as money 
delivered to those communities. But if you count the number of 
people helped, you come to something that more aligns with, I 
think, our intent on both sides of the aisle here.
    And so, I would like to just go through some specific 
things that occurred to me just reading through and listening 
to this discussion.
    Why couldn't we, for example, have retained a separate 
metric for lending and a separate metric for community 
development investments and services?
    Mr. Otting. Are you asking--
    Mr. Foster. Instead of just having, like, one number, one 
big number for the dollar volume, that just separately counts 
lending into a community and--
    Mr. Otting. We looked at that, we talked about it, and in 
the end, concluded that we would go to one numerator which gave 
banks the flexibility to apply their CRA activities to their 
particular business model.
    Mr. Foster. Right. But then the difficulty is that they 
will say, okay, I am going to get all of the numerator out of 
an investment in a big automated factory or something like 
that.
    Mr. Otting. So to your point, I didn't respond to that, but 
the the examiners actually use their judgment, did that 
particular activity have an impact? And so, we do that today. 
It is not quantified, but the examiners' observation of impact 
to the community is an important ingredient of the overall 
review. Today, we use 80 percent subjective, 20 percent 
objective. We are flipping that around, but still retaining 
that overview by the examiner.
    Mr. Foster. At the 20 percent level? The difficulty is that 
the subjective thing must vary all over the map, and inspector 
to inspector.
    But another thing, would it make sense to put some sort of 
concentration cap on transactions or activities as well?
    Mr. Otting. Concentration as in, only so much in 
residential mortgage, so much in small business?
    Mr. Foster. For example, yes.
    Mr. Otting. Yes.
    Mr. Foster. Or specific large projects.
    Mr. Otting. Again, there are different business models 
amongst banks, and today some banks achieve all of their 
objectives by small business lending, some do it all by 
mortgages, and we generally do not dictate what the business 
model could look like.
    However, on the community development, we said, in the 
markets, it has to be at least 2 percent of your dollar total 
has to be community development activities.
    Mr. Foster. Okay. Which is a pretty small fraction, 
compared to the historical. If you look at what a small 
community bank--
    Mr. Otting. It depends upon the size of the investment in 
that market.
    Mr. Foster. Yes, but if you look at the small community 
banks in rural areas and so on, they historically did a lot 
more than 2 percent, and you are replacing it with something 
less than that.
    Mr. Otting. And we are open in the comments for feedback on 
that. We obviously got that number by having a lot of 
discussions with people. And if people came back and thought it 
should be more, we would consider that.
    Mr. Foster. Yes. I think there is also a danger that the 
proposed rule expands eligible and qualifying CRA activities to 
include some of what banks already do in the ordinary course of 
business. That dilutes the effectiveness of the CRA to the 
extent that you do that.
    For example, community development activities of loans, 
investments, and services would no longer have to have, ``a 
primary purpose of community development targeted at LMI 
individuals or areas.''
    And so, there is a danger there that if it is only prorated 
credit would be given for these instances, but broadening these 
activities has the danger of perverting banks' incentives in 
ways that really will end up being contrary. So, I would be 
very careful of that change.
    Mr. Otting. On your point, I think what you were making, 
was if in a hospital was done in a community and it serviced 10 
percent low- to moderate-income, then that project would only 
get 10 percent credit toward their CRA. Is that what you were 
referencing?
    Mr. Foster. That is an example, right.
    Mr. Otting. In the 200 list, which referenced giving more 
credit, that list was accumulation through the Fed, the FDIC, 
and the OCC of what institutions are currently getting credit 
for, and then we synthesize that, did it make sense.
    Mr. Foster. Yes. And again, I think putting into those 
metrics the number of people helped in the instance of a 
hospital, even if it mainly served higher-income areas, it 
provides lots of jobs for people at all levels of income, and 
that there should be credit for the people helped as well.
    Thank you. I yield back.
    Mr. Otting. Thank you.
    Chairwoman Waters. The gentleman's time has expired. The 
witness is requested to provide an answer in writing for the 
record.
    The gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams. Thank you, Madam Chairwoman.
    And thank you, Comptroller, for coming to answer our 
questions today. I have several for you. And I know I have 
asked you this question before, but I wanted to make sure 
nothing has changed since we are into 2020.
    Are you still a capitalist? Or do you think socialism would 
be a more favorable economic system for our country?
    Mr. Otting. Congressman, when my great-grandparents came 
here from Ireland and Germany, they arrived in Ellis Island. 
They were directed to Chicago, and they were farmers. And I am 
here today because of the entrepreneurial spirit and the 
capitalism they deployed.
    My in-laws who came from Mexico and came to Los Angeles, 
their family was taken care of because of capitalism.
    I don't know what the strongest point of capitalism is, but 
I affirm my support of capitalism.
    Mr. Williams. Thank you for that. I appreciate it.
    I think there is a lot of good in the new proposal that you 
have talked about to modernize CRA regulations, and there are a 
few issues that I want to touch on specifically.
    The current CRA regime contains loopholes that allow a 
bank's balance sheet to appear as if they are engaged in CRA-
eligible activity, even though they never actually made the 
investments in their communities.
    So, can you tell us how this new proposal tightens up the 
CRA requirements to ensure that each institution is actually 
making impactful investments in the community that they serve?
    Mr. Otting. Specifically, on the mortgage side, is that 
today a financial institution could go to Southwest Washington, 
which is deemed a low- to moderate-income area, and I could 
move into that neighborhood and a bank could get credit for 
that mortgage.
    In the future, both the area and the borrower will be 
required to be low- to moderate-income. And so, we are able to 
tighten that down, so to speak, in that regard. So that is 
probably the most profound change that we have in the new 
regulations.
    Mr. Williams. Okay. Before I get into more CRA questions, I 
wanted to raise an issue with you that has been brought to my 
attention. Many financial institutions are being pressured to 
stop doing business with industries that have fallen out of 
favor with some of my colleagues on the other side of the 
aisle. From the gun industry to private prisons to fossil 
fuels, banks are under increased pressure to stop working with 
these completely legal industries.
    Mr. Posey touched on this before. And as someone who was 
personally targeted by Operation Choke Point, I want to just 
reiterate that all legal industries should have equal access to 
the financial system.
    So what would you tell financial institutions feeling the 
pressure, as well as the private entities, some of which who 
have received Federal contracts?
    Mr. Otting. Yes. We believe the banking industry should 
serve all legal businesses in America. However, we do leave 
that up to the boards and management of those financial 
institutions to make those decisions.
    Mr. Williams. Federal Reserve Governor Brainard has raised 
the point that using nationwide ratios for CRA may not be 
compatible for the needs of various communities across the 
country.
    In my district alone, we have many rural communities, such 
as Cleveland, Texas, that will undoubtedly have different needs 
than those of urban areas in my district, like Austin.
    I don't think she is necessarily wrong in her assessment, 
it appears as if the new proposal takes this into account since 
there is an asset threshold where each institution will be able 
to decide whether to abide by the new or old CRA regime.
    So can you please respond to the point that Governor 
Brainard raises, and then elaborate on how the new proposal 
would add additional flexibility for institutions serving all 
areas of the country?
    Mr. Otting. We believe this proposal offers the flexibility 
to make a determination upon the size of the market and the 
activities in the market. What I mean by that is, if your 
particular city is an assessment area, we would look at the 
low- to moderate-income activity in that market in relationship 
to all the banks, and we would look at the population of low- 
to moderate-income, and then we would compare that to the bank. 
So we are rightsizing it, so to speak, for that market.
    On the dollar size, what we are looking at is deposits 
being the numerator and how much of their total CRA activity in 
relationship to their deposits they are doing at the community. 
So if you have a big community with lots of activity, you 
better be doing your share, and you better be doing a 
percentage of your deposits. If you are a smaller community, 
obviously, what would be required of you would be significantly 
less.
    Mr. Williams. Thank you. In closing, I just want to thank 
you for your leadership, and I appreciate your vision.
    I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Florida, Mr. Lawson, is recognized for 5 
minutes.
    Mr. Lawson. Thank you, Madam Chairwoman.
    And welcome to the committee, Mr. Otting.
    One thing I would just like to state up front is that I 
don't think you or your staff, to my knowledge, has been by the 
office to talk to me about this.
    Mr. Otting. We did come by for the Black Caucus Day, and we 
sat in the conference room and we had a discussion on CRA.
    Mr. Lawson. Could you explain the Black Caucus Day, because 
I am not aware of that?
    Mr. Otting. No, no. This was just me coming up to meet with 
the Black Caucus.
    Mr. Lawson. But you hadn't come to meet with me? I don't 
want you to think that--
    Mr. Otting. It was a meeting of one on two.
    Mr. Lawson. I don't want you to think that because you met 
with the Black Caucus that you--
    Mr. Otting. No, no, I met with you and one other Member of 
it. If you recall, I came up to talk about CRA that day, and 
two Members showed up, and then you were one of the Members 
that we had a dialogue with.
    Mr. Lawson. Okay. Well, I have no knowledge of that. I 
apologize if that happened.
    Mr. Otting. We can follow up and give you the date.
    Mr. Lawson. That would be great.
    On December the 11th, you received a letter from the 
chairperson which stated that CRA is a critical tool to combat 
redlining and practices that still exist, in which banks 
discriminate against prospective customers based primarily on 
where they live, their race, and background, rather than 
creditworthiness.
    And early on, when you were giving your testimony, you 
talked about your upbringing and what really happened and one 
of the reasons why you wanted to make these particular changes.
    Could you explain a little bit further what you were trying 
to illustrate to the committee and how your background led you 
to formulate these policies that would be critically important 
to communities of color and disadvantaged communities in terms 
of CRA and how they work?
    And the reason I ask that is I represent an area that 
stretches probably 240 miles, with a lot of rural communities 
in between, where this becomes very critical. So I would just 
like to hear your perspective in coming to this conclusion, and 
maybe not extending the number of days to 120, but 60 days. 
Based on your background, how did all of this come about?
    Mr. Otting. First of all, it isn't 60 days. It is 88 days.
    Mr. Lawson. Eighty-eight days.
    Mr. Otting. But what I was making by that point is, I came 
from a very poor area. My wife grew up in east Los Angeles, 
which is a very poor area. They were first generation to the 
United States. And as I was a banker, I was able to go out into 
communities and deploy capital and lending into those 
communities and see what could be done by creating jobs and new 
low- to moderate-income housing and how it brought the vibrancy 
of the community back with financial counseling.
    So I was just making the impression that I, as Joseph 
Otting, have been in those communities across America and 
understand the need to get more lending and more capital into 
those communities.
    Mr. Lawson. Okay. Based on your experience and experiences 
that you all have been going on in developing the new 
guidelines, do you feel that the guidelines that are coming up 
now, that many of these banks would do more to invest and 
eliminate some of the discrimination that exists for many, many 
years?
    Like you said earlier, there still will be problems, but 
how is it that your agency will be able to do a better job than 
what has been extended in the past to combat a lot of this 
discrimination or redlining?
    Mr. Otting. First of all, we do observe redlining and 
discrimination. I find it appalling in America today that we 
still have instances of that. And we have a whole set of rules 
on equal credit and fair housing that we do an annual review of 
financial institutions. So, that is how the agency does that.
    In relationship to how does CRA play a bigger role, I think 
was the other question that you had for me, is by measuring 
exactly what we have the banks do and what we say qualifies. We 
can look and determine what is being done across communities 
today.
    There is no data today. That is one of the big problems 
about CRA. If you want the information, you have to go bank by 
bank by bank through their performance evaluation.
    Our goal as a team, is to be able to produce that data, so 
that a year from now when I am sitting here, you can look at a 
market and you can tell me why in Florida is it only this 
amount of money that is being invested in CRA. And you can't do 
that today.
    Mr. Lawson. Okay. And quickly, does this apply to the 
credit unions also?
    Mr. Otting. It does not. It would require legislative 
action for the credit unions to be included.
    Mr. Lawson. Okay. With that, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Arkansas, Mr. Hill, is recognized for 5 
minutes.
    Mr. Hill. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for being here today.
    I approach this like my friend, Mr. Luetkemeyer from 
Missouri, having spent 40 years complying with CRA in various 
capacities, in the late 1970s and early 1980s and in Texas for 
a large multibank holding company in their planning department, 
and then in the 1990s, compliance of a $3 billion bank reported 
to me as we rolled out and implemented the Bill Clinton changes 
to CRA in 1994 and 1995. And then for 15 years as a small, 
intermediate bank CEO. So I do look at your proposal with sort 
of a practical sense of where is it better.
    I want to first of all say that review after 2 decades is 
important to reflect the changing landscape of the industry, 
and I thank you for stepping up as one of your early 
initiatives and say, based on my experience, you having been a 
bank CEO in greater Los Angeles, for example, that you see that 
this needs to be changed.
    I have talked to you about the fact that small, 
intermediate banks bear a disproportionate amount of burden in 
trying to comply with CRA, and yet some of them are doing the 
best job of serving their communities. So as you look at the 
comments, I hope you will keep that in mind, that that balance 
is important.
    Looking at the specific proposal, you answered Mr. 
Sherman's question and also referenced a little bit to Mr. 
Williams about double counting CRA credit in the mortgage-
backed securities arena, in the housing arena. I understand 
that, and I certainly watched, with the advent of big data, 
banks originating a loan, and selling it to a mortgage-backed 
security, and as you said, $4 of CRA credit spread around.
    But a lot of banks have built their models on originating 
credit, selling them to the mortgage-backed securities market, 
and then doing it again. So, that has expanded credit in the 
United States. I am concerned that they don't get full CRA 
credit to some degree for someone who is not abusing that 
practice.
    Have you thought about providing a multiplier for banks in 
that credit risk? Or what are some of the things you are seeing 
to give nuance to just saying, well, it is just 25 percent? 
That is not a very sophisticated proposal in a really 
sophisticated market. Maybe people could get--if they held it 
over a period of time, over the duration of the loan, they got 
more credit. What are your thoughts there?
    Mr. Otting. First of all, thanks for the question.
    Of the top 10 items that we will go through, between the 
NPR and the final rule, that is one that is getting a lot of 
discussion.
    People intellectually understand where we are trying to go. 
The industry gave us that feedback initially about 25 percent, 
but over the last 2 weeks, we have done a lot of discussions 
with people, and now we are starting to hear a little bit more 
concern, should that be a higher number? And so, that will be 
one of the key things that we will kind of think through as we 
go to the final rule here over the next 60 to 90 days.
    Mr. Hill. I think that is important.
    Mr. Otting. I agree.
    Mr. Hill. I look forward to looking at the comments and 
discussing it more.
    During those 15 years that I was a bank CEO, we had two 
major rural counties, one with 20,000 people in it, and one 
with 10,000 people. The one with 10,000 people was 50 percent 
African American, with a very high poverty rate, an over 30 
percent poverty rate.
    So I share my colleagues' concerns about serving rural 
communities, and one of the rural proposals said that you are 
increasing small business loan amounts from $1 million to $2 
million and small farms from half a million to $2 million. And 
that is a real concern in Arkansas because that will mean a lot 
of smaller banks can't as easily meet their CRA threshold.
    Again, getting back to my point about truly small, 
intermediate bank sizes versus growing big regional banks, what 
are your thoughts there?
    Mr. Otting. I would like to follow up and have some 
dialogue on that, because we actually thought the feedback we 
got from a lot of the small banks is, it doesn't take much to 
get to a million-dollar crop loan in the environment today 
because the costs have risen so high, that increasing that 
would give them the ability to take care of their customers 
under CRA. By no means did I think it would be a hindrance.
    Mr. Hill. Yes.
    Mr. Otting. I would love to follow up and hear your--
    Mr. Hill. Please follow up on that.
    And the other thing I have gotten a lot of feedback from is 
your approach to counting volunteer hours and how that is 
proposed. So, maybe we can have a follow-up conversation on 
that, too.
    Mr. Otting. I would be happy to.
    Mr. Hill. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Michigan, Ms. Tlaib, is recognized for 
5 minutes.
    Ms. Tlaib. Thank you so much, Madam Chairwoman.
    I sincerely appreciate your leadership on trying to uplift 
some of the struggling issues regarding the Community 
Reinvestment Act, and I thank you so much for coming before our 
committee again, Comptroller.
    In Michigan's 13th Congressional District, I represent the 
third-poorest congressional district in the country. I 
consistently try to bring them into the room as I talk about 
these issues so that we are connected to what the impact truly 
is on the ground when we make changes here in Washington, D.C.
    Most of my residents are left at the mercy of corporate 
investors who are using both existing and new business models 
to extract as much wealth as possible, exasperating challenges 
that are already very much painful for distressed communities.
    Despite this, every year our Federal Government gives away 
billions of dollars in tax revenue incentives that have proven 
consistently to fail to help our most vulnerable communities, 
our low-income communities.
    We are actually closing schools, and taking away parks, and 
instead investing in stadiums and luxury hotels. That is 
exactly what is happening. The system is now being increasingly 
rigged, and CRA now is at the table in regards to be now so-
called used, and I think very much mislabeled, as a way to try 
to increase affordable housing for our residents.
    Mr. Otting, your proposal suggests that Opportunity Zone 
(OZ) areas would qualify for CRA credit, but it is unclear 
whether these OZ activities would have to meet CRA low-income 
definitions. Right now, there are about 1,700 designated OZ 
census tracts that do not qualify. It is currently under 
investigation, because some of these census tracts did not 
qualify under the set standards that they be poor, challenged 
communities.
    Madam Chairwoman, I would like to submit for the record a 
New York Times article saying, ``Trump tax break that benefited 
the rich is being investigated,'' as well as a recent article 
saying, ``Treasury watchdog to investigate Trump opportunity 
zone program,'' into the record.
    Chairwoman Waters. Without objection, it is so ordered.
    Ms. Tlaib. So, yes or no, under your proposal, can banks 
receive a CRA credit for activities that do not meet the 
definition under CRA currently for low- and moderate-income?
    Mr. Otting. They cannot.
    Ms. Tlaib. So right now, they can't get credit for building 
a soccer stadium, a for-profit soccer stadium?
    Mr. Otting. You said if it is not in a--
    Ms. Tlaib. They cannot get CRA credit in an Opportunity 
Zone--
    Mr. Otting. If it is not in a low- to moderate-income 
community, they cannot get credit.
    Ms. Tlaib. But right now, Opportunity Zones have been 
designated in areas--
    Mr. Otting. The clarification is, it could be an 
Opportunity Zone as long as it is a low- to moderate-income 
neighborhood. If it is that percentage of Opportunity Zones 
that are not low- to moderate-income, it would not qualify for 
CRA.
    Ms. Tlaib. Okay. So if it is in a low- to moderate-income 
community, great, check.
    Mr. Otting. That is right.
    Ms. Tlaib. So, if a for-profit hockey stadium gets built, 
they get credit for that? In a low- or moderate-income 
community, they will get credit for building a for-profit--
    Mr. Otting. Yes, I appreciate, if you don't mind me 
answering, so--
    Ms. Tlaib. No, go ahead.
    Mr. Otting. So, since--
    Ms. Tlaib. Yes or no?
    Mr. Otting. Since 1993--
    Ms. Tlaib. It can.
    Mr. Otting. Since 1993--
    Ms. Tlaib. Chairwoman, it just needs to be very clear.
    Mr. Otting. --they have given credit for sports facilities.
    The beauty of putting this list out and giving people the 
ability to offer comments is, if you don't like that, you can--
    Ms. Tlaib. Please accept this as me submitting comments, 
saying I have an issue with this.
    Mr. Otting. We have to have written comments.
    Ms. Tlaib. I will do that for you, no problem. I will write 
it out for you. I will give you a number of various projects in 
Detroit and throughout Wayne County where for-profit prisons 
should not qualify to get CRA credit; there is a for-profit 
hockey stadium, where literally a mile down the street, Cass 
Tech High School doesn't have clean drinking water. Do you see 
what I am saying here?
    The true intent of CRA was not to help the wealthy and 
those who already do not need help. And you know this.
    Comptroller Otting, know that the frontline communities, 
that is why we are here. Government has to be about people. And 
right now, they are rigging the system. And CRA, you are 
allowing them to codify into the CRA that, yes, for-profit 
prisons and stadiums can actually get CRA credit in low- to 
moderate-income communities. That is wrong.
    Mr. Otting. Then, that is why we should change it in the 
comment period.
    Ms. Tlaib. Yes. That is why I am telling you right now, if 
you want me to put it in writing, but I am telling you on 
behalf of 13 District strong, I am giving you notice that we 
have a serious problem with you giving credit for these kinds 
of activities that have nothing do with access to affordable 
housing.
    Mr. Otting. You say, ``me.'' It has been in place since 
1993. I am the first person--
    Ms. Tlaib. I understand, but you just codified--no, you are 
codifying it.
    Mr. Otting. I am the first person who is putting a list 
together--
    Ms. Tlaib. Yes or no, you are codifying it now?
    Mr. Otting. You have become aware of it because I put the 
list out.
    Ms. Tlaib. Oh, no, no, no, I wasn't here, sir. I have only 
been here a year. I would definitely, even as a State 
representative, I would have submitted comments and put you on 
notice. But I am telling you, you are codifying it. It is okay. 
We are not--
    Mr. Otting. You are missing my point. The only reason you 
even know about the stadium is because I put the list out for 
public comment.
    Ms. Tlaib. Yes, you can say that, but it doesn't make it 
right or wrong, right?
    Mr. Otting. I am not arguing whether it is right or wrong.
    Ms. Tlaib. Look, I am going to submit questions, Madam 
Chairwoman, to him directly, and Mr. Otting, I would like for 
you to answer them in writing.
    Mr. Otting. I came by your office before, and I would be 
happy to do that again.
    Ms. Tlaib. Yes. Coming by my office does not actually make 
it right. It is still wrong to give credit to for-profit 
prisons and stadiums for CRA.
    Thank you.
    Chairwoman Waters. The witness is requested to provide an 
answer in writing for the record.
    Mr. Otting. I am not sure of any for-profit prisons that we 
have given CRA credit for.
    Chairwoman Waters. The gentlelady's time has expired.
    Mr. Otting. Thank you.
    Chairwoman Waters. The witness is required to reply in 
writing to the Member as soon as possible. Thank you.
    The gentleman from Tennessee, Mr. Kustoff, is recognized 
for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for appearing today.
    At the end of your time, I know you were trying to finish 
an answer. Would you like some additional time to try to 
finish?
    Mr. Otting. I was just going to comment that I am not aware 
of a private prison receiving CRA credit.
    Mr. Kustoff. In relation to that last set of questions, was 
it the Clinton Administration that put the proposal into 
action?
    Mr. Otting. The last time it was modified was 1995, but the 
activities that we put out on the list were actually begun in 
1993.
    Mr. Kustoff. Thank you.
    If I could, Comptroller Otting, I know that a couple of my 
colleagues have asked you about this, but I read an article 
that was authored or co-authored by former Senator Phil Gramm 
in The Wall Street Journal a couple of weeks ago, and it 
discussed the cross-section between CRA credit and attempts by 
some to target legal businesses and in some case companies with 
Federal Government contracts, politicizing, if you will, some 
of the banking services.
    And I think we are all aware of what happened during 
Operation Choke Point by the previous Administration to deny 
credit to creditworthy customers, if you will, through 
political intimidation. If you could, though, Comptroller, 
could you address whether the OCC has done any analysis of 
industries that are being denied banking or credit services 
even though they may be financially sound and otherwise 
creditworthy?
    Mr. Otting. We have not done a study. Our position is that 
legal businesses should have access to the U.S. banking system, 
and we leave those decisions up to the management of the boards 
of the respective banks. However, under CRA, an institution is 
required to serve the entire community if they are domiciled in 
that banking community.
    Mr. Kustoff. Following up on that, what guidance would you 
give those companies and industries from the OCC in order that 
they can obtain that financing and stay legal?
    Mr. Otting. We give guidance that legal businesses should 
have access to the U.S. banking system.
    Mr. Kustoff. Also, as it relates to farm lending in rural 
communities--and you have had a number of questions as it 
relates to those communities, and you talked about your 
parents--in my district, which is the Eight Congressional 
District of Tennessee, I represent a number of small farmers. 
And in fact my State, Tennessee, has the largest Farm Bureau 
membership in the country.
    So could you talk about your proposal or the proposal of 
the OCC and how it could better serve the rural communities 
through increased farm lending?
    Mr. Otting. Yes. There are a couple of key things as we 
worked our way through in speaking to family farm owners. One 
was that the dollar amount used to be half-a-million dollars or 
less, and family farms were included for CRA. We are moving 
that to $2 million. That did a lot of restrictions from banks 
getting credit for CRA.
    In addition to that, we have also now allowed larger 
organizations that maybe are not with a branch in a respective 
rural community to be able to do qualified CRA investments in 
lending into those communities, and we think that will drive 
more capital and investments in rural America.
    Mr. Kustoff. Thank you.
    And I do think that when we overlook rural America and when 
we talk about the LMI communities, but obviously some of these 
rural communities are struggling. We know that job 
opportunities are few and far between.
    Given--and you have talked about this--that physical bank 
branches are disappearing, we have seen that over a number of 
years for a number of reasons, including technology, as well as 
the proposal focus on bank deposits from outside of the 
physical locations, how do you envision that component directly 
impacting rural America?
    Mr. Otting. I think we have seen this migration through the 
internet into certain geographic areas where those deposits are 
managed by a headquarters operation. What we are trying to do 
with this rule is those entities that have more than 50 percent 
of their deposits that are coming outside their assessment 
areas, assessing where they have 5 percent or more, and then 
requiring those banks to invest in those communities across 
America.
    So there is movement from branches to internet. And then 
outside the community, we are trying to create a mechanism so 
that they invest back into the communities of America. This 
will be a first step. We will get lots of comments about 
whether it should be 5 percent or a lower number as we kind of 
work our way through the rule.
    Mr. Kustoff. Thank you. My time has expired.
    Chairwoman Waters. The gentlewoman from Massachusetts, Ms. 
Pressley, is recognized for 5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman, for your 
continued oversight, especially on an issue as consequential as 
the Community Reinvestment Act.
    A lot has been said about this proposal, that it is rushed, 
it is not community-informed, it disregards the will of this 
Congress. However, I believe the words and actions that matter 
most in this process are yours, Comptroller Otting.
    Last week the American Banker reported you as saying, ``I 
have no problem with people challenging this. This is a 
complicated, emotional issue.''
    Yes or no, do you believe opposition to this proposal is 
couched in emotion or misunderstandings, too complex--
    Mr. Otting. I don't think it is an either/or question. I 
think it is understanding it, so you can fully understand what 
we are trying to do, without getting false information from 
various people, so that you can reach your own conclusion.
    Ms. Pressley. So again, do you believe opposition to this 
proposal is because people--I am just elevating what you said 
in American Banker--are emotional, or it is too complex for 
them to understand?
    Mr. Otting. I can answer the question the same way if you 
would like.
    Ms. Pressley. Sure.
    Mr. Otting. But I wouldn't want to use your full 2 minutes.
    Ms. Pressley. Okay. Very good.
    We recently held a hearing where a panel of CRA experts 
testified about your proposal, and I asked that expert panel, 
by a show of hands, how many supported your approach. Of the 
five-person panel, would you venture to guess how many raised 
their hand in support of your proposal, this panel of experts?
    Mr. Otting. I saw it, but it is a stacked deck.
    Ms. Pressley. Reclaiming my time.
    Mr. Otting. You can use statistics like that, but four of 
them were Democratic witnesses, so--
    Ms. Pressley. Only one witness--
    Mr. Otting. It is because four of the five were Democratic 
representatives.
    Ms. Pressley. How many raised their hands in support of the 
approach outlined by Governor Brainard? All five.
    I find it hard to believe that four out of five issue 
experts are opposed because this is a complicated, emotional 
issue, the idea of a single metric, which Governor Brainard 
warned would encourage more capital-heavy investments instead 
of smaller.
    If, hypothetically speaking, you ran a bank that loaned to 
people of color, would you choose originating 300 small 
business loans over making one $300 million investment if the 
credit is all the same? Yes or no?
    Mr. Otting. I think you are confused on the issue. We do 
not have a single metric down to the individual--
    Ms. Pressley. I am not confused, and I am not the only one 
who believes you have a single metric.
    So, moving on--
    Mr. Otting. There is--
    Ms. Pressley. Mr. Otting.
    Mr. Otting. Here is the document. Show me on what--
    Ms. Pressley. Mr. Otting.
    Mr. Otting. Show me on what page, there is a single metric.
    Ms. Pressley. Reclaiming my time, do you believe in a duty 
to serve, yes or no?
    Mr. Otting. Do I what?
    Ms. Pressley. Do you believe in a duty to serve? Are you 
familiar with that?
    Mr. Otting. I do.
    Ms. Pressley. Okay. So in 2014 and 2015, under your 
leadership, how many mortgage loans did OneWest make to Black 
borrowers in assessment areas, given your commitment to duty to 
serve?
    Mr. Otting. There was a very small quadrant of small loans 
that was made that was--that the assessment was made on. But I 
am the Comptroller of the U.S. Currency, so if you have issues 
regarding OneWest Bank, you should contact them.
    Ms. Pressley. I certainly have issues because there were 
only--the answer is two.
    Mr. Otting. Yes, but out of how many? Fifty-six, out of 56.
    Ms. Pressley.Reclaiming my time. Reclaiming my time, that 
isn't much of a--
    Mr. Otting. Let's just be realistic about the quadrant. It 
was a very small quadrant--
    Ms. Pressley. Reclaiming my time.
    Mr. Otting. --because we were focused on mortgages--
    Ms. Pressley. Comptroller Otting, I have a number of things 
that I am looking to get on the record from you.
    But the point is, that isn't much of a commitment to 
serving anyone, let alone the communities the CRA was intended 
to serve.
    While you were CEO, OneWest was one of very few banks to 
receive a low satisfactory score on their service test. So, yes 
or no, would you trust someone who repeatedly failed a key 
component of a driving exam with rewriting the rules of the 
road?
    Mr. Otting. Those were three failed institutions that we 
brought together. We did not have a long history--
    Ms. Pressley. Yes or no?
    Mr. Otting. There is no ``yes'' or ``no'' answer to this 
question.
    Ms. Pressley. We disagree on that and many other things, 
Comptroller, respectfully.
    Mr. Otting. Three failed institutions that we brought 
together, that we did the best. And I think if you go speak to 
people in the Los Angeles community, OneWest Bank has done a 
remarkable job in their community reinvestment.
    Ms. Pressley. Again, we could debate that.
    It seems your takeaway from your experience with the CRA is 
not that your bank, or any bank, for that matter, needs to do 
better, but that you should get more credit for business you 
were going to do anyway.
    Either you want to hear what people have to say or you 
don't, Comptroller Otting. Your responses to community groups 
and this Congress alike suggest you don't.
    Thank you, and I yield back.
    Chairwoman Waters. Will the gentlelady yield me the balance 
of her time?
    Ms. Pressley. Absolutely, Madam Chairwoman.
    Chairwoman Waters. Mr. Otting, I am going to ask you to 
think about the stadiums that are being built in the Inglewood 
area of Los Angeles. I know you know the area. You have the 
Chargers, you have the Rams, and you have the Clippers. And, of 
course, gentrification is taking place.
    They are now, under your proposal, eligible for loans in a 
way that they have not been in the past. People are being moved 
out. The rents are going up. The cost of housing has exploded. 
They are being basically forced out of the community. But the 
stadiums now can get CRA credit.
    You don't have to answer now. I am going to move on. And 
hopefully, someone will yield me time for another question.
    With that, the gentleman from Ohio, Mr. Gonzalez, is 
recognized for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, for 
holding this hearing.
    And thank you, Mr. Otting, for your service to the country 
and for your participation today.
    I want to start with one point, which is I think that it is 
somewhat comical that the witnesses are always experts. I would 
like to remind the committee that we had a comedian, I guess, 
in here, I forget when, who completely embarrassed himself, and 
it was an enormous waste of time to have his presence here.
    And so this notion that every single person we bring 
forward is somehow an expert, I think, is something that we 
should reconsider.
    So with that, on the stadiums piece, I just want to confirm 
something. We are in the comment period today, correct?
    Mr. Otting. That is correct.
    Mr. Gonzalez of Ohio. Okay. So this isn't currently law?
    Mr. Otting. Oh, it has been in the law since 1993.
    Mr. Gonzalez of Ohio. Okay.
    Mr. Otting. And we go back--that is as far as we could 
research where a bank was given credit. So, it is currently in 
the law. It is up for discussion only because we brought it out 
that it was available.
    Mr. Gonzalez of Ohio. Yes.
    Mr. Otting. No one had ever raised the issue in the past.
    Mr. Gonzalez of Ohio. And I want to commend you for that, 
because over the last few weeks, I have spent quite a bit of 
time talking about banks throughout my State, and I will tell 
you in my conversations, I haven't heard objections. I have 
heard hesitation on certain items--and I will press on that in 
a second--but I haven't heard anybody say, this is a bad idea, 
this is going to harm the community.
    One of my banks in particular has an outstanding rating, 
one of the highest ratings, and they have done a great job. And 
the CRA has, for all of Ohio really, I think, been a huge 
benefit. And people are excited about the change, they are 
excited about the objectivity, in particular, because I think 
in some respects it has been a black box, and sort of the 
subjectivity of each regulator has made this harder to do.
    And so, I commend you for putting the proposal forward. I 
encourage you to continue taking feedback, obviously, and 
implement it as necessary.
    And on kind of one of the points I heard yesterday when I 
was talking with a bank, they said, ``We like the proposal. We 
are a little concerned with the timeline. It is a big shift. It 
is a fundamental shift with respect to how you track and 
calculate your CRA activities.''
    So I guess my question would be, what do you think about 
the timeline component, and how much willingness is there to 
work with the banks to help them make this adjustment?
    Mr. Otting. We have communicated that we think the timeline 
transition is 1 to 3 years.
    Mr. Gonzalez of Ohio. Okay.
    Mr. Otting. For two reasons. One is the technology 
reporting for the denominator on deposits; most banks report 
deposits by branch code versus geocode, and so we are going to 
have--some can do it, some can't. We think we need to work on 
getting it to geocode. And then, we have also committed that 
any bank in their 3-year assessment period, we wouldn't start 
until the new timeline. So we are offering up, as a minimum, a 
1-year and potentially a 3-year transition.
    All of the financial institutions that I have spoken to in 
the last couple of weeks, when we have clarified that for them, 
I think it has given them great comfort that they can make that 
timeline.
    Mr. Gonzalez of Ohio. Okay. Thank you.
    And then I want to move on to discuss how you view the 
future of banking as it relates to emerging technologies. So, 
leave the CRA alone for a second.
    I believe the OCC was the first prudential regulator to 
launch an innovation program. Today, all of the Federal 
financial agencies have initiatives of some form but that they 
are all separate. As you know, the U.S. has a much more 
complex, multiagency regulatory structure than other countries, 
a fact that many cite as creating a risk to U.S. leadership and 
financial leadership globally.
    Beyond informal discussion, do the agencies need to form an 
ongoing channel for coordinating on innovation, identifying 
areas where they should work together and sharing learnings 
with each other? Is there an argument against doing so?
    Mr. Otting. I don't know if there is an argument against 
that. I think the agencies do a pretty effective job. If you 
think about, really, the FDIC and the CFPB just stood those up 
recently.
    Mr. Gonzalez of Ohio. Yes.
    Mr. Otting. And I think there is a lot of coordination.
    Probably the bigger issues are clarifying and giving legal 
guidance as to how those entities will be formed. Whether they 
will be LICs or special charters is probably the next big thing 
that has to be resolved.
    Mr. Gonzalez of Ohio. Okay. And then, more broadly, what is 
the potential for supervisory technology and regtech to reduce 
compliance costs to banks and, therefore, their customers, and 
could it help community banks meet the competitive challenges 
they face, in your estimation?
    Mr. Otting. That is a complicated thing. The regtechs--part 
of how we take that forward into the future, is we spend a lot 
of time specifically in the AML/BSA activities, trying to say, 
okay, now we have the standard high up in enough. We are 
comfortable they are complying with the law. What technology 
can they use to make those costs more effective?
    Mr. Gonzalez of Ohio. Yes, and I am running out of time. I 
would love to follow up on that specifically. AML BSA, I think 
we have an opportunity from a tech standpoint to really improve 
what we are doing there.
    With that, I yield back.
    Chairwoman Waters. The gentlewoman from Virginia, Ms. 
Wexton, is recognized for 5 minutes.
    Ms. Wexton. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for joining us here 
today.
    The CRA examinations evaluate bank service to LMI 
communities in three general areas: lending; investment; and 
service. And one way for banks to fulfill this service criteria 
is through nonprofit community programs like financial literacy 
or volunteering at a food bank, is that correct?
    Mr. Otting. That is correct.
    Ms. Wexton. Okay. During August recess, I visited a 
community farm in my district where there just happened to be a 
busload of employees from a local bank who had just been there, 
and they had been weeding and harvesting and planting and 
everything like that. That is a local community farm that grows 
fresh produce for food banks in the area, so it's a great, 
great community service.
    But I am concerned that the proposed plan gives undue 
weight to quantitative measures at the expense of qualitative 
measures, and the volunteer hours can really illustrate that in 
my mind. The plan calls for quantifying an hour of volunteer 
service using BLS payroll numbers to equate volunteer hours to 
investments. So I did the math and it looks like for a $2 
million community development loan, one loan for one project, 
not even a particularly large project, that would equate to 
55,555 hours of volunteer service based on the $36-an-hour rate 
that was proposed in the NPR.
    Can you explain how a single loan like that would compare 
to tens of thousands of hours of volunteer work in the LMI 
communities? What is the rationale for that?
    Mr. Otting. That is an abstract question. I would have to 
understand the community, what the community development loan 
was used for versus what the volunteer hours were used for.
    Ms. Wexton. But having a 1-to-1 ratio like that, you can 
understand how that could skew in favor of some of these for-
profit development projects that don't really necessarily--
    Mr. Otting. As we indicated, we have metrics, and then we 
have examiner judgment. At the top of the house, the examiner 
judgment will look at the activities that qualified, and they 
have the ability to move or make comments on the ultimate 
valuation or evaluation based on their subjective evaluation. 
So, some of the things you described would go into that 
subjective evaluation.
    Ms. Wexton. I am concerned, because the whole point of 
changing to these criteria is so that you have an objective 
criterion, and now you are saying this objective part of it 
would help make up for that. So I would just urge you to 
consider coming up with a criterion that would give greater 
weight to those kinds of community service organizations.
    Mr. Otting. We have used the concept of multipliers, 
especially if you read the proposal. In the equity for CDFI and 
low-income housing, we have heard they had a difficult time 
attracting equity. So maybe a multiplier concept--
    Ms. Wexton. Yes. Thank you. I would suggest that might be a 
helpful way of doing that.
    I do want to talk just very briefly about the financial 
literacy component of it. In the previous iteration of the CRA 
analysis, that had been limited to LMI communities and 
communities of need, but now you are expanding it to any 
communities, and I am concerned about that because banks can go 
to, for example, an upscale retirement community in my 
neighborhood, in my district, and conduct these financial 
literacy classes, which are really nothing more than marketing 
schemes for their bank, and that would qualify under the 
service component of the CRA.
    What is the rationale of extending that from the 
communities of need to just anybody?
    Mr. Otting. As we went out in communities across America, 
we heard that the need across America is for financial 
literacy, and people felt that it shouldn't be just restricted 
to low- to moderate-income people. So, we put that in as a 
question.
    Ms. Wexton. Reclaiming my time. But do you understand that 
the purpose of the CRA is to help low- to moderate-income 
communities?
    Mr. Otting. I do.
    Ms. Wexton. Thank you very much.
    I will at this time yield the balance of my time to the 
chairwoman.
    Chairwoman Waters. Thank you very much.
    I started out discussing what was happening in Inglewood. 
Are you familiar with Inglewood, California?
    Mr. Otting. I am.
    Chairwoman Waters. Do you know about all of the stadiums 
that be are being built and moving in?
    Mr. Otting. I do.
    Chairwoman Waters. They are now eligible for loans in a 
concrete way, in ways that they were not in the existing CRA.
    Mr. Otting. That is not correct, Chairwoman.
    Since 1993, the banks have allowed CRA credit for stadiums. 
So, this is not a change to that program.
    Chairwoman Waters. I'm sorry. My time is up. We will get 
back to this when I have more time.
    The gentleman from Tennessee, Mr. Rose, is recognized for 5 
minutes.
    Mr. Rose. Thank you, Chairwoman Waters, and Ranking Member 
McHenry.
    And thank you, Comptroller Otting, for being here today. As 
we have heard a lot today, the Community Reinvestment Act 
modernization proposal offered by the FDIC and the OCC reflects 
a significant shift away from the current outdated regime to a 
new one that should better reflect the realities of today's 
banking industry. I don't know that the proposal as it is 
currently written is perfect, but I do know that the current 
CRA has not kept pace with today's changes in technology, and 
current regulations and approaches create uncertainty for banks 
and can serve as barriers to carrying out CRA's intended 
mission. So I want to applaud you for taking on what obviously 
is for many a contentious issue.
    As I reflect upon my own small business career, and my 
involvement in community banking back in Tennessee, I am just 
really struck by the notion that CRA hasn't been updated in a 
quarter of a century, and I know that if in my business, I had 
not evolved sufficiently in a quarter of a century, that would 
mean trouble for my business.
    So, again, I applaud you for taking this on, and despite 
some of the criticisms about the timing for moving it forward, 
I think it points to the problem with regulatory burdens like 
CRA, well-intended perhaps in their beginning, but then they 
become static and concrete and they interfere with the natural 
evolution and advance of small business. So I applaud you for 
moving forward, and I think it is time to do so, and I think 
that this probably is an area that we should revisit more often 
than every quarter century, and so, again, thank you for doing 
so.
    I know that one of the facets of this proposal that aims to 
provide certainty to financial institutions is publishing a 
publicly available list of pre-approved CRA activities that 
will qualify for CRA credit. No doubt, we have heard some 
discussion about some of those activities.
    Comptroller Otting, how is this initial list going to come 
together, and is it expected to be an exhaustive list?
    Mr. Otting. Thank you very much. The list came together 
through the interagency work between the Federal Reserve, the 
FDIC, and ourselves of what current activities were being given 
credit under CRA, and so that got accumulated where we put it 
out in the body of the NPR for comment for people to be able to 
either react positively or negatively to that. It is the first 
time since the Act was approved in 1977 that there was any kind 
of list put forward.
    There is a commitment in the NPR to review that list, at a 
minimum, every 3 years. We will make it a living and breathing 
thing. But just as important, we have created an intake where 
people can come to their primary regulatory and seek approval 
on perhaps items that are not on that list today.
    Mr. Rose. From the comments the OCC and the FDIC have 
received up to this point, do you think a list like this can 
help fix the problem of subjective and time-consuming 
examinations? Is that the crux of it?
    Mr. Otting. I think it helps bring clarity both to the 
communities and the banks of what items can qualify for CRA, 
and so, when a community has a particular project they are 
interested in doing, they know they can go to the banks and 
talk about getting CRA credit for that, and I think that will 
dramatically improve that.
    The other thing is that often banks will do transactions, 
that in the middle of their CRA exam, they find out don't 
qualify, and so it forces people back to the most conservative, 
middle-of-the-road type CRA investments, and we want to 
encourage new and innovative ways to do CRA in communities that 
help low- to moderate-income people.
    Mr. Rose. I have heard some criticisms that this proposal 
actually disincentivizes smaller loans. Do you agree with that 
assessment?
    Mr. Otting. I do not, because we have a metric-based in 
every assessment area that a bank operates in that will measure 
the units and the dollars.
    Mr. Rose. Can a bank write just one large check to satisfy 
their CRA requirements under this proposal?
    Mr. Otting. Absolutely not.
    Mr. Rose. I know you have covered this, but I want to give 
you a chance here in about 40 seconds, this issue of NFL 
stadiums, to just give you some time to respond to that. It 
sounds to me like you have pointed out an issue that is of 
grave concern to people by undertaking this process.
    Mr. Otting. I actually appreciate the interest of people in 
this item because it goes to prove that getting that list out 
and getting people's feedback is important for what really 
works for communities, and it has been done since 1993. So we 
are not doing anything new with this proposal other than 
identifying what have been historical practices.
    Mr. Rose. Thank you.
    And, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from California, Ms. Porter, is recognized 
for 5 minutes.
    Ms. Porter. Hello, Mr. Otting. Governor Leal Brainard has 
been running point on the CRA modernization at the Fed. She 
gave a presentation earlier this month, explaining how the Fed 
came to its blueprint, why the Fed believes that its version is 
more true to the purpose of the CRA than the OCC's version. Are 
you familiar with Governor Brainard, herself?
    Mr. Otting. Yes, I am.
    Ms. Porter. She has been working on economic policy for 30 
years. She studied at MIT, and has worked at the U.S. Treasury, 
the White House, the Brookings Institution, and the list goes 
on.
    Mr. Otting. I am not aware that she has been working on it 
for 30 years.
    Ms. Porter. Do you think that Governor Brainard doesn't 
understand your CRA proposal?
    Mr. Otting. You would have to ask Governor Brainard that 
question.
    Ms. Porter. Do you think Governor Brainard is somehow 
economically advantaged by the current CRA framework?
    Mr. Otting. You would have to ask--
    Ms. Porter. She is somehow--
    Mr. Otting. You would have to ask--
    Ms. Porter. Well, no, I am asking for your opinion.
    Mr. Otting. I don't have an opinion.
    Ms. Porter. You don't have an opinion about whether 
Governor Brainard doesn't understand your CRA proposal or is 
economically advantaged by your CRA proposal?
    Mr. Otting. You would have to ask her that question.
    Ms. Porter. You recently said in The Wall Street Journal, 
``If you don't like the OCC's CRA blueprint, you are either 
economically advantaged by the current structure or you don't 
understand it.''
    So, basically, you are either corrupt and on the take or 
you are not educated or intelligent enough to digest the OCC's 
proposal. What bucket should I put Governor Brainard in?
    Mr. Otting. I guess you have to make that decision 
yourself.
    Ms. Porter. Is there a third bucket?
    Mr. Otting. I wouldn't offer up an opinion.
    Ms. Porter. Because you did say that, if you don't like the 
proposal, if you oppose the proposal--and I oppose the OCC's 
proposal--you either are economically advantaged by the CRA--
which I am not--or I don't understand it. Which do you think 
applies to me?
    Mr. Otting. You would have to make a determination on how 
you would want to vote.
    Ms. Porter. Is there a third category you would like to 
develop for people like me--
    Mr. Otting. Not at this time.
    Ms. Porter. --who don't agree with you?
    Mr. Otting. Not at this time.
    Ms. Porter. How about Chairwoman Waters? She opposes the 
OCC's CRA proposal. Would you say she is somehow on the--
    Mr. Otting. You would have to make that determination.
    Ms. Porter. I would encourage you to understand that some 
people who don't agree with the OCC's CRA proposal simply have 
read the CRA, have studied it, are economic experts or have 
been on this committee, leading this committee currently, and 
simply have a different vision of the CRA than you do, and I 
would ask you to be please be respectful, particularly in the 
press, about how you talk about those who disagree with you, 
because rulemaking is a collaborative public process, and each 
of us, whether we are a Congressperson or we are just a member 
of the public, has the right to disagree, and it doesn't mean 
we don't understand or that we are somehow on the take under 
the current system. It just means we have a different vision.
    Mr. Otting, you also said that 9 out of 10 major banks are 
supportive of the direction the OCC is heading. Are you 
familiar with the American Bankers Association (ABA)?
    Mr. Otting. I am.
    Ms. Porter. The top 10 banks in the country are all members 
of the ABA, and yet the ABA itself has put out a statement, 
which I have here, and I am happy to submit for the record.
    May I submit this for the record?
    Chairwoman Waters. Without objection, it is so ordered.
    Ms. Porter. The ABA said, ``We continue to believe that the 
nation would be best served by a final interagency rule that 
also includes the Federal Reserve which would provide a 
consistent regulatory framework for all banks.''
    That is the ABA statement. Yet, you recently said 9 out of 
10 of the major banks are supportive of the OCC proposal. I am 
confused, Mr. Otting. Which major banks were you talking about? 
Is this like a toothpaste commercial where 9 out of 10 dentists 
agree?
    Mr. Otting. I think the statement you read is different 
than whether the banks support it. What they said in that 
letter is their preference would be that the three regulatory 
agencies come together on a final rule. That is one comment in 
that letter. The other comment is the banks deciding that they 
would like to move forward. They have issues, and we have asked 
them to comment on those issues.
    Ms. Porter. Reclaiming my time.
    Mr. Otting. We look forward to those comments in the 
final--
    Ms. Porter. Reclaiming my time. The American Bankers 
Association statement will be in the record. So, that will be 
speak for itself.
    But you said 9 out of the 10 major banks are supportive of 
the direction the OCC is heading. Who are those major banks?
    Mr. Otting. I would be happy to come by and have a dialogue 
with you if you think that would be appropriate.
    Ms. Porter. You are unable to state for the committee today 
any banks that support your direction?
    Mr. Otting. We will file a comment letter with the comments 
of the financial institutions with which I have had 
discussions.
    Ms. Porter. Thank you.
    I yield back.
    Chairwoman Waters. The gentleman from South Carolina, Mr. 
Timmons, is now recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman.
    And I would like to thank you, Comptroller Otting, for 
taking the time to come and answer our questions today. This is 
an important hearing, and I appreciate your presence here.
    Mr. Otting. Thank you.
    Mr. Timmons. I want to start at the beginning.
    Could you discuss what you think the original purpose and 
intent of the Community Reinvestment Act was and share your 
thoughts?
    Mr. Otting. Clearly, in 1977, as the Congress was looking 
at the way banks were serving their communities, they found 
instances where there were redlining activities and 
discrimination activities, and they felt that banks should 
serve their entire communities in which they operate, and some 
of that activity was actually done by the U.S. Government. And 
so, the Act was approved in 1977, that encouraged banks to 
support their entire communities but required the regulatory 
agencies to do an observation of that, and then, in follow-up 
succession Acts, it was determined that the written reports 
needed to be produced to justify the banks' observations.
    Mr. Timmons. We keep hearing a lot about football stadiums, 
and you referred to the 1993 date as the time which they were 
eligible for CRA funds. Could you talk about that history as 
well?
    Mr. Otting. Just a point of clarification, the first time 
we could find where an athletic facility got CRA credit was in 
1993. So, it wasn't like there was a change at that point in 
time. It is just the first time we saw the agency start to give 
credit, and these include soccer fields and AA baseball 
stadiums and things like that. So, it is not like a 
professional, but athletic facilities in 1993 is the first time 
we saw where banks were given credit.
    Mr. Timmons. What percentage overall would you say goes to 
these types of projects currently?
    Mr. Otting. Oh, you mean in the total of CRA, there is $480 
billion in annual CRA activity across the nation.
    Mr. Timmons. Less than 10 percent? Less than 5 percent?
    Mr. Otting. In the basis points.
    Mr. Timmons. Okay. Thank you.
    I want to quickly talk about the list of the activities 
that are CRA-eligible in your proposal versus what is currently 
eligible. What are the differences?
    Mr. Otting. A hundred percent.
    Mr. Timmons. What are the differences currently versus in 
the proposal? Just big picture.
    Mr. Otting. We actually put on paper what qualifies and 
then published that list, which had never been previously 
published.
    Mr. Timmons. So, this will give banks more clarification?
    Mr. Otting. Yes.
    Mr. Timmons. And now, they don't have to wonder whether 
projects they are investing in will qualify or not, and they 
will be--
    Mr. Otting. Right. Now we did find geographic differences, 
meaning stuff that was being done in New York that qualified 
wasn't being done in other places. Stuff was being done in Los 
Angeles that wasn't being done elsewhere. So, quantifying that 
list for the nation is what I would say would be different.
    Mr. Timmons. So, a more--
    Mr. Otting. Robust.
    Mr. Timmons. A better framework to understand the entire 
program.
    Mr. Otting. That is right.
    Mr. Timmons. I have had some concerns from people in my 
district. We have a couple of substantial banks there. They are 
concerned that with the proposals surrounding what areas 
qualify, my community will receive less from those banks. I 
understand that, but I guess the next question is, will other 
banks that are currently not investing in our community make up 
that difference? Could you talk some about that?
    Mr. Otting. I am not aware of where any bank would pull 
back from an area based upon the revisions to what we are 
accomplishing. It will increase the areas that banks will be 
required to do Community Reinvestment Act activity, but I would 
be happy to either call those banks or have dialogue with you 
through them to make sure that I understand their concern, but 
there should not be a community in America, based upon what we 
are doing, that should see a reduction in their CRA 
requirements.
    Mr. Timmons. Okay. Thank you.
    I have also heard some concerns from individuals and groups 
involved in providing affordable housing for LMI communities. 
What are your thoughts on how affordable housing CRA 
investments will be affected by the proposal?
    Mr. Otting. First of all, the big challenge that we have 
heard about housing as we went across the United States and 
talked to people was attracting capital. Most people will tell, 
you we can get all the debts we need for low-income housing, 
but attracting capital has been the complicated part.
    So, in the proposal, what we did is we offered up a 
multiplier for equity that goes into low-income housing 
projects and CDFIs that, if you provide equity, we have said, 
should we give 2 times credit or 3 times credit in the 
numerator for the formula, and that has been received quite 
well, I think, by those people who are participating in that 
industry.
    Mr. Timmons. And, again, this is a process where feedback 
will produce a final result.
    Mr. Otting. Right.
    Mr. Timmons. And that is a very constructive process.
    Mr. Otting. Actually, getting to the multiplier came from 
the feedback process.
    Mr. Timmons. Thank you. I appreciate your time.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you.
    The gentlewoman from Iowa, Mrs. Axne, is recognized for 5 
minutes.
    Mrs. Axne. Thank you, Madam Chairwoman,
    And I thank you, Comptroller Otting, for being here. I 
appreciate having another Iowan here.
    It is good to hear that we are seeing some unity across the 
banking industry in support of the real purpose of the 
Community Reinvestment Act. Of course, let's go back to that: 
preventing discrimination and ensuring that people and 
communities are not left out of our financial system and our 
economy. That is the core of why we are all here.
    I am concerned that this proposal will take money away from 
States like Iowa. We know that this isn't just an urban problem 
or a rural problem, and we need to recognize that what is going 
to be helpful for areas here in D.C. might not be helpful in 
places like Creston, Iowa, in my district. And by the way, the 
needs in rural opportunity are different, as you well know. 
Maquoketa has different concerns than Corning, Iowa. Northwest 
and southwest Iowa are different in many ways.
    My concern then is that moving towards a one-size-fits-all 
proposal never works, certainly not when it comes to equal 
opportunity. So, Comptroller Otting, are you concerned that by 
giving all banks the same list of activities that are eligible 
for CRA credit ahead of time and reducing the importance of 
qualitative evaluation, as my colleague, Ms. Wexton, referred 
to earlier, that this proposal is going to reduce the incentive 
for banks to work directly with communities to make sure they 
are getting what they actually need from banks?
    Mr. Otting. I do not think that it will do that.
    And as a point of clarification, in communities across 
America--and let's just take a particular regional bank that I 
know has a lot of branches in your district--they probably 
don't today identify that as an assessment area, and in the 
future, no matter where those large banks have, they will have 
to do CRA activities in those communities, and we will measure 
that. So, it is our viewpoint that more activity will flow into 
rural communities across America rather than less.
    Mrs. Axne. I will be anxious to see that because the 
proposal talks a lot about reducing what are called 
inconsistencies in CRA evaluations, and I would argue that we 
should be seeing inconsistency. That is the beauty of the 
different communities in this country and the differing needs 
that they have. I would say that the inconsistencies would show 
a well-run program. If we are saying that everybody falls into 
the same category, and we are not looking at these different 
variables, this whole thing should be based on the variables 
that are brought to the table. So, therefore, you are going to 
have inconsistencies in how things operate.
    My concern is that this inconsistency is what happens when 
banks are properly listening to what local communities want and 
are meeting those needs, and we are going to lose that in this 
new proposal.
    Mr. Otting. Can I respond to that quickly?
    Mrs. Axne. Sure.
    Mr. Otting. I don't think we lose that because, in 
preparing the list of everything that is being done, we have 
actually discovered for a lot of people other things that could 
qualify in their community, but just as important, we have 
created an intake valve where someone in your community can 
come to their regulator and say, ``Hey, we are thinking about 
doing this. It is unique. It is not on the list. Can we get 
pre-approval before we do it and then find out after the fact 
it doesn't qualify?''
    Mrs. Axne. I would love to see that part of the proposal in 
detail.
    Mr. Otting. It is in the ANPR.
    Mrs. Axne. Yes, and I would hope that somebody who is from 
the Midwest really understands the issues we are facing, not 
just with this but in general with the economy overlooking 
parts of this country. And my job is to stand up for States 
like Iowa and make sure they get what they need. So please, 
please, make sure that you use those good Iowa roots to ensure 
that we are protecting people in States like ours.
    Moving on, the proposal also makes some changes to the 
assessment areas that banks have to serve, including creating 
deposit-based areas. There is obviously a balance here. Having 
a physical bank to go to is important for a lot of my 
constituents in Iowa, and there is a lot of research showing 
that people and small businesses are more likely to want to 
borrow from their local bank. That said, I absolutely recognize 
the way people bank has changed and that regulation should 
reflect that, but the threshold for an area to qualify is 5 
percent of the bank's deposits, is that correct?
    Mr. Otting. Yes. Today, there is no criteria for an 
internet bank to do any CRA other than where their headquarters 
is, or where they identify an assessment area. So we put in the 
proposal that if 50 percent or more of your deposits come from 
outside your assessment area, those markets that are 5 percent 
or more would be deemed an additional assessment area, but we 
have put that out for comment and have asked the question, ``Is 
5 percent the right number?'' But this is the first step 
towards trying to have internet-based providers put dollars 
back into local communities.
    Mrs. Axne. I am glad you are going to continue to look at 
that because it is 5 percent of retail domestic deposits, if I 
am correct, and I would say that we only have four States--
California, Texas, Florida, and New York--that even have even 4 
percent of the U.S. population. So, for a nationwide bank, I 
think a small State like Iowa or West Virginia is going to have 
a tough time qualifying as an assessment area.
    Mr. Otting. It is 5 percent of that bank's deposits, not 
the banking industry.
    Mrs. Axne. Okay. Well, that is good to hear.
    Thank you. I am out of time.
    Mr. Otting. Thank you very much.
    Chairwoman Waters. Thank you.
    The gentleman from North Carolina, Mr. Budd, is recognized 
for 5 minutes.
    Mr. Budd. Thank you, Madam Chairwoman.
    Comptroller Otting, it is good to see you today.
    Before I dive in on CRA, as you probably know, the House is 
going to vote on a bill later today to comprehensively reform 
the consumer credit reporting system. I don't know if you've 
seen many news reports on this. I doubt you have, because the 
committee just held one hearing on this, and it was in February 
of last year, 2019. But I would like to know what the OCC would 
think about the likely consequences of removing accurate 
information from those credit reports.
    For example, the bill would shorten the time that some 
information can remain on the credit report from 7 years down 
to 4 years, and it would virtually remove all predictive data 
from the credit reports.
    So, as quickly as you can, has the OCC looked at the impact 
on safety and soundness of making such broad changes to the 
contents of credit reports?
    Mr. Otting. Excuse me for 1 minute. I am not as familiar 
with it, but the person who would be is right here.
    Mr. Budd. Thank you.
    Mr. Otting. So, we are aware of it, but we haven't issued 
an opinion on it at this point in time.
    Mr. Budd. Okay. That is a pretty significant bill that we 
are voting on that has virtually no engagement. It seems like 
we should have done more in the House to present that evidence 
to you and have you weigh in on that.
    But I want to move on. The regulations in the CRA have not 
been updated in about 20 years. I think that has been discussed 
a little earlier today. In fact, they were written even before 
interstate branching and internet banking even exited. However, 
critics of CRA reform say that modernization would decrease 
lending in low- to moderate-income communities. Can you 
elaborate on whether or not you believe your proposal would 
increase lending in low- to moderate-income communities, and do 
you believe that if the regulations stay as they are without 
reform, that it might actually hinder lending in those 
communities?
    Mr. Otting. We absolutely do think it will increase lending 
in low- to moderate-income areas.
    Mr. Budd. The reform would, correct?
    Mr. Otting. Pardon me?
    Mr. Budd. The reform would increase lending?
    Mr. Otting. Yes. It would absolutely increase it for a 
number of reasons: one, offering accountability by having a 
measurement system that we can all look at both on units and 
dollars, by eliminating low- to moderate-income qualifications 
of loans that actually go to high-income people in those 
communities across America, and then also increase the 
reporting that is done in all assessment areas for a bank 
versus just a small segment of the bank's assessment areas. And 
we will have tremendous amounts of better data to be able to 
share with Congress once we complete this.
    Mr. Budd. Thank you.
    You mentioned also in a recent Bloomberg article that you 
appreciated the Fed's framework and even incorporate some of it 
into your proposal. Can you tell us some details on what 
aspects of the proposal come from the Fed's ideas and 
framework?
    Mr. Otting. Yes. In the individual assessment areas, we 
always felt units and dollars were important, and the OCC and 
the FDIC were talking about, should we limit the size of a 
transaction to drive that there is granularity in the actual 
units. The Fed came up with a process of taking a bank's low- 
to moderate-income loans, divided by their total loan volume, 
and then comparing that both to the population and the 
transactions in the market, and we adapted that into the OCC 
and FDIC proposal. So, a big part of what Governor Brainard had 
with us in dialogue is included in the OCC and FDIC proposal.
    Mr. Budd. It sounds like some good common sense. Thank you 
for that.
    And, Madam Chairwoman, I yield back. Thank you.
    Chairwoman Waters. The gentleman from Utah, Mr. McAdams, is 
recognized for 5 minutes.
    Mr. McAdams. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for being here today. 
The CRA was instrumental civil rights legislation from the 
1970s meant to address redlining. Its fundamental goal is to 
ensure that financial institutions have an affirmative 
obligation to serve the credit needs of local communities in 
which they are chartered.
    And I will repeat what I said when the FDIC and the Fed 
were here in December: CRA reform must preserve the spirit and 
intent of the CRA to benefit low- and-middle-income communities 
and individuals while also updating the CRA for a 21st Century 
financial system.
    I do have concerns about this not being a unified 
rulemaking with the Fed, and I also believe that we should have 
a fulsome comment period. It is more important to get CRA 
reform done correctly than hastily.
    A number of our financial institutions have used strategic 
plans in the past to solicit community input and to develop 
their CRA plans, and as a former mayor, I participated 
oftentimes in some of this strategic planning. So, I was glad 
to see that that was maintained in the proposal. Thank you.
    With that, I do have a couple of questions. Comptroller 
Otting, I have some concerns with the 50 percent, 5 percent 
system that you're setting up with the proposal. Rather than 
drive investments and lending into underserved areas, I think 
what that will ultimately do is shift activities from one hot 
spot to another hot spot. I really think you are just going to 
shift focus into high-population States and Cities like New 
York City, Los Angeles, Texas, and Florida, leaving the rest of 
the country in the same spot that they are now.
    Presuming that a bank must set up new assessment areas 
where they don't currently have a footprint, how should they be 
expected to know what the credit needs or community development 
needs of an entire State or large MSA are, and wouldn't this 
just lead to a cookie-cutter, least-common-denominator approach 
to meeting that obligation?
    Mr. Otting. I think they would do it just the way that 
institutions do it today. They do it usually through community 
reinvestment officers in those respective markets who tie into 
the local community, participate in what the needs are of the 
community, and then take those needs back to the banks and 
share where the opportunities are.
    Mr. McAdams. My concern is really the qualitative nature of 
that engagement. As a former mayor, I know how much these 
institutions reached out to try and understand community needs, 
not only with mayors and local officials, but other community 
members, and I worry the 50 percent, 5 percent paradigm shifts 
really undermine the qualitative nature of that local 
engagement.
    Moving on to a different topic, when visiting with a number 
of my stakeholders, they have also expressed concerns with some 
of the changes to the community development section, 
specifically regarding the promotion of economic development by 
financing small businesses.
    In the proposal, some of the language on supporting 
economic development by financing small businesses was 
eliminated. In light of the critical importance of economic 
development and job creation, retention and/or improvement for 
low- and moderate-income individuals and the demonstrated 
success of these programs to create opportunities, to create 
jobs, self-reliance, and prosperity for low- and moderate-
income individuals in underserved communities, what was the 
policy reasons for eliminating those provisions from the notice 
of proposed rulemaking?
    Mr. Otting. I am not aware where we have eliminated--and 
you are saying in the investment test?
    Mr. McAdams. In economic development, specifically.
    Mr. Otting. I don't think we did. Maybe we should follow 
with up with you.
    Mr. McAdams. Yes, I can share with you some of the language 
that raised some alarms.
    Mr. Otting. I would very much appreciate it. This is a 
great time in the comment period to give us feedback.
    Mr. McAdams. Okay. That is great. That would be very 
helpful. Thank you.
    Lastly, Comptroller Otting, one of the concerns I have and 
one of the areas that I am focused on in any CRA reform 
proposal is, what does reform mean for affordable housing and 
market-rate housing development? Utah, like many places, is 
facing a growing housing shortage with quickly escalating home 
prices. So, this is important for me and my State, particularly 
since the proposal opens up a number of business lines that can 
count towards CRA obligations, I worry that the focus on 
affordable housing may fall by the wayside.
    Has the FDIC released any analysis on what the proposal 
would mean for supporting affordable housing development and if 
we see a shift in CRA activities away from that space?
    Mr. Otting. The list of qualified activities are what was 
currently being done across the United States today. So we 
haven't opened it up. We have just clarified what gives CRA 
credit today. I think your issue on housing is an important 
one. As we have traveled around the United States, you used to 
hear about the need for jobs and activities and then housing. 
Now it is housing is one, housing is two, and housing is three. 
So, I think that is a valid point. We can talk more about that 
when we come by.
    Mr. McAdams. Thank you. My last question--it looks like we 
are out of time, but I want to focus on the ability to continue 
to innovate and not just have cookie-cutter proposals but 
innovative proposals of the CRA. So we will follow up with 
that.
    Mr. Otting. Okay.
    Mr. McAdams. And, with that, I yield back.
    Chairwoman Waters. The gentleman from Wisconsin, Mr. Steil, 
is recognized for 5 minutes.
    Mr. Steil. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for being here today.
    I appreciate your work at looking at CRA as a way to update 
its regulation that, as we have noted here today, has not been 
updated for quite some time, and I think there has been pretty 
healthy dialogue also about the concern of implementation. And 
I would encourage you to look as to ways to take this 
regulation and find ways to improve the efficiency of the 
implementation. Because I think that it has been discussed 
pretty broadly, I am going to pass on asking questions on the 
implementation today and shift gears slightly to the Volcker 
Rule.
    As you know, Representative Gonzalez and I have led a group 
of members from this committee in writing to you and the other 
financial regulators regarding the Volcker Rule and its reform. 
The letter that I sent was dated December 3rd of last year and 
argued that the covered funds provision in the Volcker Rule was 
overly broad and unnecessarily included venture capital and 
other long-term funds.
    Prior to the implementation of the Volcker Rule, banks 
supplied a significant amount of capital to venture and growth 
funds, and this was especially true in regions like Wisconsin 
and across the Midwest that aren't typically the magnets for 
this type of investment. Exempting venture and growth funds 
from the Volcker Rule's covered fund definition, I believe 
would spur increased investment in innovative companies in 
places like Wisconsin, across the Midwest, and across the 
country.
    Could you comment on your view of the need to fix or revise 
the Volcker Rule and, if so, what you have been doing to 
address this?
    Mr. Otting. First of all, I do agree with your comments. As 
a former banker, we were actively participating in those small 
tranches of various forms of preferred or common or 
subordinated debt that these companies needed before they could 
go out and access the larger dollar amounts that generally were 
available through Wall Street. I view that as a critical 
component of capital for growth and expansion of those 
businesses, and the Volcker Rule took that away.
    There has been a high priority amount of work, I would say, 
on this particular topic. If I could ask you to wait a week, I 
think you would be really pleased. I wouldn't want to comment 
publicly until all the agencies have approved it but I would 
say we are in the short stroke, so to speak, of accomplishing, 
I think, the modifications that we have described.
    Mr. Steil. I appreciate the feedback. I will wait anxiously 
to see what you put out in a week. I appreciate you coming here 
today.
    And I yield back.
    Chairwoman Waters. The gentlewoman from North Carolina, Ms. 
Adams, is recognized for 5 minutes.
    Ms. Adams. Thank you, Madam Chairwoman.
    And thank you, Comptroller Otting, for being here.
    CRA is meant to meaningfully address redlining and ensure 
access to capital in LMI areas, including for small business 
lending. There continues to be a need for affordable small 
business loans for low- and moderate-income individuals and 
those seeking to open small businesses in low- and moderate-
income communities.
    A recently released CFPB report notes that reductions in 
access to capital for small businesses have been exacerbated by 
bank and branch closures, and, thus, there are fewer formal 
banking options available to small businesses. So, despite the 
numerous calls to strengthen incentives for small business 
lending and improving data collection, this proposal fails to 
do that.
    In fact, your proposal's one ratio and credit for large 
infrastructure projects will lead to banks focusing on big 
deals rather than small businesses, business or home mortgage 
lending.
    So how does your proposal define small business lending and 
what specific ways does it seek to increase access to capital 
for small businesses already located in the LMI communities?
    Mr. Otting. In the proposal, we are raising the dollar 
amount of small business lending that qualifies for CRA from $1 
million to $2 million because, as we have traveled around, we 
heard that was too restrictive for businesses.
    And so we think that has a positive impact on dollars that 
can flow into those communities, specifically in the CDFI 
arena, which is where a lot of small business lending is being 
funded by CDFIs that are in those communities, and know the 
people in those comments. Two very important things are: one, 
we have clarified that CDFIs will qualify for CRA; and two, we 
have put forward in the proposal that the equity that goes into 
CDFI could be multiplied, meaning that if you were willing to 
put a dollar of equity in, you could get $2 or $3.
    So, we think we have had a strong vision on small business 
lending of how we create dollars. I would also just add a 
comment that we are seeing, as banks do a less effective job in 
small business lending, that internet lenders are coming into 
that space in a fairly robust way.
    Mr. Adams. Okay. I have another question as well. It is 
paramount that the Community Reinvestment Act is implemented in 
a manner that is consistent with its original purpose to ensure 
that all communities, including low- to moderate-income 
communities, have equal affordable access to the banking 
system. Concerns have been raised that the proposal decouples 
the link between CRA and the legacy of redlining--we talked a 
lot about that--that it was intended to redress and 
specifically the link to minority communities that have been 
systemically discriminated against.
    So would you explain how your proposal specifically 
preserves the legacy and the mission of the CRA as it was 
originally intended?
    Mr. Otting. The CRA--we believe there is nothing that we 
are changing that changes that mission or requirements. As you 
know, we have fair housing and equal credit requirements also 
that we look at financial institutions' activity on an annual 
basis. If there are any violations of that, we are required to 
report those to the Department of Justice or HUD. So I don't 
believe there is any changes in this document that takes you 
away from the original intent of the 1970 and in my mind 
actually enhances it because there is greater accountable.
    Mr. Adams. So, yes or no, do you believe that modern-day 
redlining occurs?
    Mr. Otting. I do think there is modern-day redlining.
    Mr. Adams. Okay. Let me ask one other question.
    I want to return to the discussion on Opportunity Zones and 
follow up on the concerns that Ms. Tlaib raised during her line 
of questioning. You indicated in 2018 that you expected to 
offer CRA for opportunities on investment. Your proposal 
includes that. So are you aware of the concerns about the 
legislation due to the lack of accountability and oversight? 
Yes or no, are you aware of that?
    Mr. Otting. I'm sorry. I missed the question.
    Mr. Adams. Are you aware of the concerns about the 
legislation and its lack of accountability and real oversight?
    Mr. Otting. On Opportunity Zones?
    Mr. Adams. On Opportunity Zones.
    Mr. Otting. I read comments that people feel like perhaps 
some of the markets didn't meet the original intent of the 
legislation, but I do not spend a lot of time on the 
Opportunity Zone side.
    Mr. Adams. There have been a lot of issues raised about it. 
Are you interested in--
    Mr. Otting. We are not impacted by the Opportunity Zones 
because we don't have jurisdiction nor--it is generally a tax-
related issue, and so we are not directly involved in the 
Opportunity Zones. The only time there is crossover is where we 
have said that if a low- to moderate-income area is also in an 
Opportunity Zone--
    Mr. Adams. I am out of time. Thank you very much.
    I yield back.
    Chairwoman Waters. The gentleman from Texas, Mr. Gooden, is 
recognized for 5 minutes.
    Mr. Gooden. Thank you, Madam Chairwoman.
    Thank you, Mr. Otting, for taking the time to attend 
today's hearing, even if you haven't always felt welcome at 
times.
    Before presenting these questions, I just wanted to 
highlight the significance of today's hearing and a few 
pressing concerns around the intent and purpose of the 
narrative built around today's hearing.
    The CRA regulations that have been in place since 1995 lack 
objectivity, fairness, transparency, and consistency, and they 
are very confusing. This isn't my personal take, but the 
concerns voiced by legitimate stakeholders in the 1,500-plus 
comments on the proposed notice over the past 18 months, and I 
see your head is nodding in agreement. Ninety-eight percent of 
the comments said the current regulations are confusing; 94 
percent of the comments said the current regulations lacked 
objectivity, fairness, and transparency; and 88 percent of the 
comments said that current legislation lacked consistency.
    And, in fact, the current regulations are riddled with 
loopholes, as we have discussed here, some that even allow for 
CRA credits for loans to wealthy households in LMI areas, which 
inevitably leads to the gentrification of those areas, which is 
something that my colleagues across the aisle have voiced some 
disturbance with, and I agree with them.
    So it is only natural to conclude that we actually do need 
broad reform of these policies, and we need it to be 
consistent, transparent, objective, and as clear as possible. 
And I believe that will fulfill the CRA's true intent and 
purpose to ultimately serve LMI households and individuals.
    However, instead of supporting your reforms, which I think 
are great, the majority has decided to question everything 
throughout this stage including the implementation, and I have 
heard a lot of reliance today on dissident voices. Earlier 
today, you were questioned about your knowledge of the 
overwhelming opposition that we had here a few weeks ago. It 
was difficult for you to get a response out, but only one 
Republican was there. It was very partisan.
    We have heard about this letter that I think was sent to 
you by Members of Congress. They were all Democrats. So, we 
have seen a very partisan take on this but, nonetheless, you 
are here. We are happy you are here and we thank you.
    I have a few questions. You mentioned that expansion of 
qualifying activities will encourage more capital investment 
lending and services in LMI, rural, and distressed communities. 
Would you please expand on that?
    Mr. Otting. Yes. There are two ways we think that works, or 
actually three ways. The first, you identified, not allowing 
people to get credit for mortgages to high-earning people in 
low- to moderate-income areas. The second is publishing the 
list of what qualifies, so communities can look broadly in 
their community and ask, where could we get credit for CRA 
which would motivate a bank to take on transactions like that? 
And the third is at the top of the house, once we look at the 
individual assessment areas, a bank can choose to move dollars 
at the top of the house around once they have met a certain 
criteria and go out to places like Indian Country or family 
farms or do additional small business lending outside their 
assessment areas. We think that will populate more activity 
across America.
    Mr. Gooden. Thank you.
    In December, you mentioned there was a lot of support for 
the reforms from the public, as well as banks, but you also 
stated there was strong opposition from certain groups. Who are 
those groups, and why are they against these reforms?
    Mr. Otting. There is a long list, but I Congresswoman 
Porter tried to put it into two buckets: either they are on the 
take; or they don't understand it. We spent a lot of time 
trying to make sure people understood it. As to the comments 
that you made, objectivity, transparency, all of those things 
are what you would think people would want, but there are 
groups who are economically benefited by not having that 
objectivity, and when there is a merger or an acquisition, they 
show up and basically demand money from financial institutions 
or not support the merger.
    Mr. Gooden. Which leads to those loopholes I mentioned, and 
I would like to know how you tackled the issue in your reform 
proposal to kind of take care of getting rid of these loopholes 
that people are taking advantage of?
    Mr. Otting. I think you do it by having objectivity, 
because if at any point in time, if we are proficient at our 
goal, a bank will be able to know every 90 days whether they 
are in compliance with CRA. It is like capital. If we said to a 
bank, ``We are not going to tell you until after the exam 
whether you passed the capital exam,'' people would say that is 
the stupidest thing they have ever heard in their lives, but 
that is kind of what we do with CRA.
    So, if you can look at your balance sheet every quarter and 
decide, am I in compliance with the capital laws, why can't we 
decide every 90 days if you are in compliance with CRA?
    Mr. Gooden. Thank you. I appreciate your time.
    And I yield back to the chairwoman.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Pennsylvania, Ms. Dean, is recognized 
for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman.
    And, Mr. Otting, I, too, thank you for being here today and 
I am hoping you are listening to our suggestions and our 
concerns. I think everybody in this room, on both sides of the 
aisle, wants to strengthen CRA, to see that it is as effective 
as possible, doing its mission, to build community, to build 
wealth, and to eliminate discrimination.
    I wanted to first point out opposition to your proposal 
that is across the industry. It is across community groups, 
agencies. For example, FDIC Board Member Martin Gruenberg, as 
some have said here, voted against the proposal, describing it 
as, ``a deeply misconceived proposal that would fundamentally 
undermine and weaken the Community Reinvestment Act.''
    It is also notable that the Federal Reserve did not join in 
this proposal due to remaining concerns about the proposed 
rulemaking. A Federal Reserve Board Governor was quoted as 
saying, ``Given that the reforms to CRA regulations are likely 
to set expectations for a few decades, it is more important to 
get the reforms done right than to do them quickly.''
    I couldn't agree more, and I was hoping that somewhere in 
your testimony today, you would pause and say, ``I have to 
pause as a banking regulator. I have to listen to these other 
voices, including advocates who have come before this 
committee.''
    So I ask that of you, will you consider taking a pause to 
take input from these hearings and from these other regulators?
    Mr. Otting. Yes, you have 40 days to complete the--
    Ms. Dean. No, I asked you for a greater pause.
    Mr. Otting. --comment period.
    Ms. Dean. Not the 40 days.
    Mr. Otting. You have 40 days to comment in the period.
    Ms. Dean. Will you consider a longer period of time--
    Mr. Otting. The answer is no.
    Ms. Dean. You will not. Why not?
    Mr. Otting. Because we feel that this has been a multiyear 
process where we have extracted a lot of feedback and 
comments--
    Ms. Dean. I will reclaim my times. Other experts in the 
field do not believe it has been thoughtfully considered.
    Mr. Otting. Everybody is entitled to their own opinion.
    Ms. Dean. Exactly.
    I would like to talk about the problems in the proposal 
that affect my community. I represent suburban Philadelphia, 
Pennsylvania's Fourth Congressional District. In my home 
district of Montgomery County, we have seen some of the highest 
proportions of bank closures, including over 15 percent of 
locations in the years 2008 to 2016. We know this 
disproportionately affects low- and moderate-income 
communities' access to financial production. Do you agree with 
that?
    Mr. Otting. I would have to see the data. You are asking me 
to comment--
    Ms. Dean. This is data--
    Mr. Otting. You are asking me to comment on something 
without being able to see the data and analyze it.
    Ms. Dean. We will be sure to share it with you, but it is 
actually important to your rulemaking. It is important to your 
regulation and rulemaking.
    Mr. Otting. I am not sure I totally understand your 
question.
    Ms. Dean. Excuse me. I will restate the question. In your 
rulemaking, did you consider the closing of branch banks and 
what impact that has on low- and moderate-income communities? 
Surely, you must have.
    Mr. Otting. The answer is yes. For first time ever, ever in 
the history of the CRA regulations, we are giving banks credit 
for maintaining or opening LMI branches. That has never been 
done before.
    Ms. Dean. And yet this rule will continue the closing of 
bank branches in low- to moderate-income communities. That is 
the assessment that we have seen.
    I will continue. This affects the core of the Community 
Reinvestment Act's mission. According to the Philadelphia 
Federal Reserve, the importance of the bank branches and the 
service they provide lies at the very heart of the Community 
Reinvestment Act. By eroding incentives to open bank branches 
in low- and moderate-income communities in your proposed CRA 
rule, I am afraid you are going to hurt my constituents rather 
than help them in your reformation of CRA.
    Do you understand the connection between access to 
community banking in areas that are low income and access to 
wealth, access to capital?
    Mr. Otting. I do know, and I see nothing in the rule that 
would support your statement.
    Ms. Dean. You should take a look at the research that has 
been done that shows that you will actually dilute the ability 
of folks to--
    Mr. Otting. Again, if you would like to send the research 
over, we would be happy to review it.
    Ms. Dean. I am certain you are well aware of it, sir, and 
that is what you are actually in the business of doing: 
collecting the research and understanding the impact of your 
reform to CRA.
    Finally, I want to say something. I find your comments 
about discrimination puzzling. How is it that a man in your 
position, 30 years in banking and regulation, said in 2018 
before this committee, and then repeated today, that you have 
not seen discrimination? I don't know how you have been in this 
country and not seen discrimination. You said in 2018 that you 
didn't watch TV or read newspapers and you had not seen 
discrimination.
    Are you the best person to reform--
    Mr. Green. [presiding]. The gentlelady's time has expired. 
You may submit your additional statement for the record.
    Ms. Dean. Thank you, Mr. Chairman.
    Mr. Green. You are welcome.
    The Chair now recognizes the newest member of the 
committee, the gentleman from Texas, Mr. Taylor, for 5 minutes.
    Mr. Taylor. Thank you, Mr. Chairman. I appreciate it.
    And thank you, Comptroller. I appreciate you being here.
    I just wanted to make sure I kind of understood the Federal 
process. Now, you are making a rule. It was published, I 
believe, on January 9th. A letter was written about it on 
December 11th. So, clearly, before you published it, people 
knew about it, because they were already asking questions. Are 
you complying with the Federal laws as they are written in your 
rulemaking?
    Mr. Otting. We are.
    Mr. Taylor. Okay. And so it isn't that what you are doing 
isn't in compliance with the law. It is just that people, I 
guess, some people here are unhappy with the laws as they are 
written. Is that a fair--
    Mr. Otting. They are unhappy with the comment period which, 
as you recall back in August of 2018, before that, we spent 
months and months and months going around to communities across 
America and soliciting feedback. We produced an ANPR that had 
roughly 40 questions that we asked people to give us feedback 
on. Then, from those questions, we again went out around the 
communities across America and started to put a framework 
together and talk to people about that framework.
    And so, between August of 2018 and December of this year, 
which was roughly 14 months, we entertained concepts, thoughts, 
and opinions, and then produced on December 12th, the actual 
notice of proposed rulemaking. Then, it was published in the 
Federal Register on January 9th, offering up a 60-day comment 
period, which we knew would be long. It turned out to be 88 
days in total. And we have been on a long-term process that 
people want to describe as short-term.
    Mr. Taylor. So, the 1,500 comments you are referring to, 
were those collected subsequent to the publication on January 
9th or were they--
    Mr. Otting. No. As part of the comment period, we got 1,500 
comments, but there were meetings with thousands of other 
community organizers, and nonprofit civil rights organizations 
who came to the OCC, and you may or may not know that we went 
around to markets across America, and hosted bus tours where we 
went into low- to moderate-income communities and met with 
community leaders to find out, what are your needs, and how can 
the CRA fulfill those needs?
    Mr. Taylor. With thousands of meetings and bus tours, it 
seems like there has been a considerable effort to get input.
    Mr. Otting. Enormous, more than I am aware of for any other 
rule.
    Mr. Taylor. Wow, that is terrific. I applaud you for that 
level of effort and engagement, in reaching out to 
stakeholders. I assume you weren't meeting with bankers. You 
were meeting with people who were applying for loans. You were 
meeting with community interest groups.
    Mr. Otting. Most of those 75 percent were community 
leaders.
    Mr. Taylor. Wow. Okay. So you are not even really going so 
much to the people who are having to comply with the CRA and 
fill out the forms, but you are going to the people--
    Mr. Otting. People who did low- to moderate-income housing, 
people who did CDFI activities, which is small business 
lending. The real true people who were in communities doing the 
activities. That is whom we wanted to hear from.
    Mr. Taylor. It sounds terrific. I wish we had this kind of 
effort to bring in input, and clearly you are modernizing an 
Act that is in desperate in need of it.
    In terms of modernization, just shifting slightly, you seem 
to have indicated that bankers were gaming the system. How are 
they gaming it? And you refer to the $1 equals $4. But could 
you sort of expand on that?
    Mr. Otting. I don't know if I would say ``gaming'' is the 
right word, that structurally they had the ability to do this. 
And what they were able to do is, when a mortgage is originated 
either as a single mortgage, a pool of mortgages, or it is 
created into a security of low- to moderate-income borrowers, 
banks could trade those items, and every time they traded those 
items, it was counted as 100 percent for CRA.
    And so as we looked at that, we felt that was one of the 
ways that we wanted to analyze a bank's long-term commitment on 
their balance sheet as a percentage of deposits. By doing that, 
we are eliminating that motivation to trade those securities 
around, that you sell them to me, and I sell them to her, and 
she sells them back to me, and I get a dollar of credit every 
time that mortgage traded hands, in accomplishing my CRA. But 
not one new dollar was going into that community.
    Mr. Taylor. And so, how are you adjusting that? The 
difference, I think, is between originating and holding a 
mortgage, right?
    Mr. Otting. Yes.
    Mr. Taylor. So, the person who originates it may not be the 
person who holds it one quarter or the next quarter or the next 
quarter?
    Mr. Otting. Yes.
    Mr. Taylor. So, a loan portfolio can move around. How are 
we changing that?
    Mr. Otting. The person who has it on their balance sheet 
will get credit for the length of time they have held it, and 
the person who originates mortgages and sells them off will get 
credit as if they have held that mortgage for 90 days even if 
they have only held it for 1 day.
    And that is a part, I would say--we talked about, what are 
the top 10 things we are hearing about in our dialogue with the 
financial institutions. They are saying that may be too 
restrictive, and I think we will get some comments back through 
the period which will cause us probably to look at that and 
decide, did we pick the right number, 90 days, should it be 180 
days?
    We clearly don't want to, by any means, reduce the amount 
of dollars that are flowing into the community.
    Mr. Taylor. My time has expired. Thank you.
    I appreciate that, Mr. Chairman. I yield back.
    Mr. Green. The gentleman's time has expired.
    The gentleman from Illinois, Mr. Garcia, is recognized for 
5 minutes.
    Mr. Garcia of Illinois. Thank you, Mr. Chairman.
    Good afternoon, Mr. Otting.
    First, I want to go on record as taking strong exception to 
your earlier characterization of the CRA as some sort of an 
instrument that people in communities use to extract dollars 
from banks.
    I do so because I came to know one of the CRA's champions 
in Chicago, Gale Cincotta, a community activist, a community 
builder, who was renowned across this country by people who 
work in low-income and working-class communities, and to build 
them up.
    The topic at hand, given the proposed measure of CRA-
qualifying activities is dollar-based, per your proposal, banks 
would be encouraged to engage in high-dollar, simpler projects. 
As we have discussed today, that is likely to include flashy 
investments like stadium renovations that make it easier for 
banks to pass their CRA examinations but do little to help the 
low-income communities CRA was written to serve.
    Mr. Otting, there are many smaller, more complex projects 
worth investing in, in my district. CRA is helping to drive 
that investment. I would like to tell you a couple of stories.
    One, Gabriela Roman is an executive director of the Spanish 
Coalition for Housing, headquartered in the Hermosa 
neighborhood in my district. She writes, ``We refinanced our 
main office building at 1922 North Pulaski in 2018 for 
$670,000. It took us a long time to find a lender because it 
was a small deal. We eventually refinanced with a small bank 
that made the loan a part of their community reinvestment 
activities. The office serves about 4,000 community residents 
each year.''
    Two, Lulu and her husband Rupert live in the Belmont Cragin 
neighborhood in my district. They have a long history on the 
northwest side with the housing center, starting in 2013 when 
the couple purchased their first home, after completing our 
first-time home-buyer class.
    ``We were able to take control of our finances with the 
class and figure out what best fit our income in terms of 
finding a loan and a property,'' Lulu said, ``and we learned 
what we can afford and what we cannot.''
    Lulu's involvement with the center has blossomed from 
there. She became a block leader, organizing play streets 
events that provide families safe places for their children and 
hosting neighborhood meetings to discuss residents' concerns 
and issues. This is what community building is about.
    Lulu's first-time home-buyer class was supported by CRA 
contributions from financial institutions who considered the 
donation part of their CRA investment strategy and support. As 
a small nonprofit organization, Lulu would be unable to 
continue those classes providing necessary education and 
engagement without CRA contributions.
    Mr. Otting, if your proposal is adopted, all banks will 
need to do to meet their CRA obligations is invest in a few 
high-dollar projects with scale. I am concerned that projects 
like the ones that have helped Gabriela and Lulu will be 
neglected.
    Have you considered the likelihood that banks will abandon 
their investment in worthy projects in needy neighborhoods like 
the ones I have described?
    Mr. Otting. First of all, I love those stories about 
Gabriela and Lulu, and I think those stories are told all 
across America, where people get the chance to be a part of the 
American Dream.
    Mr. Garcia of Illinois. And to my question, sir?
    Mr. Otting. First of all, I think maybe you don't totally 
understand our proposal. In the assessment areas, we are 
measuring units and dollars. No financial institution can do a 
couple of large transactions--
    Mr. Garcia of Illinois. So you are not concerned that it 
will have the impact that I described, yes or no?
    Mr. Otting. No, I am not.
    Mr. Garcia of Illinois. You are not. Okay.
    You have been a banker. What is the incentive for a bank to 
say, ``I will fund one large project instead of a hundred or a 
thousand smaller projects?'' Isn't it easier just to fund one 
large one?
    Mr. Otting. The structure that we are proposing will not 
allow them to do that.
    Mr. Garcia of Illinois. In my opinion--and I have read it, 
and I have been an urban planner and a community builder for 
many decades in Chicago--it will. So, thank you for your 
answer.
    I would like to enter into the record, Mr. Chairman, a 
report on community reinvestment from The Resurrection Project 
in Chicago. It provides for affordable housing, financial 
education, and immigration services on Chicago's southwest 
side.
    Mr. Green. Without objection, it is so ordered.
    Mr. Garcia of Illinois. Thank you.
    The report describes $537 million in community investment 
that The Resurrection Project has created or preserved. Behind 
this figure are thousands of homeowners helped, affordable 
housing units created, spurred economic development on retail 
strips in that community, and foreclosures prevented.
    The CRA helps make this possible. I urge you to rethink 
your proposal.
    Thank you, Mr. Chairman.
    Mr. Green. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Loudermilk.
    Mr. Loudermilk. Thank you, Mr. Chairman.
    Mr. Otting, thank you for your patience. I think we are at 
the bottom of the ninth, and I am the closer. So, maybe we can 
wrap this thing up.
    I really appreciate you being here. Thank you for what you 
are doing. There is something that has kind of been lost in the 
last few years here in Congress, and it is constructive 
dialogue, where we can speak to each other as adults.
    I apologize that some of my colleagues aren't able to do 
that. But I think it is important that if we are actually going 
to get to something for the American people, that we can do 
that. And we are always going to have differences.
    I think it is beyond time for us to address these issues 
with the CRA. And I will get to the CRA in a moment.
    But my focus, especially having rural areas, areas that 
were really, really hit hard during the financial crisis--
Georgia lost more banks than any other State. We still have had 
a problem with de novo banks, new banks starting up. We still 
have about three counties that don't have a bank branch at all.
    Where you have that, you have the lack of capital in 
lending, and we need to do something to spark that going in.
    Now, I need to make sure that everyone has access to 
capital. And one of the areas that I am concerned about 
relating to that is valid when made, is there are some 
businesses out there that I think have been wrongly 
characterized that are providing funding to areas that other 
banks either aren't or cannot, because lack of small-dollar 
lending.
    And as you know, because of the Madden decision, the court 
deviated from almost 2 centuries of precedent of when a loan is 
made, and that loan is sold, that the interest rate of the 
original loan stays with it. And that is in jeopardy.
    Could you explain why is it important for banks to be able 
to transfer loan risk off their balance sheets into the market?
    Mr. Otting. It creates liquidity. And certain people have 
the ability to have origination capabilities and be out in 
geographic markets or vehicles to create that. And then, often 
there are investors who will look to provide the capital to 
fund those loans. And all of a sudden, if that whole model is 
disrupted because, if I am a buyer, and maybe that interest 
rate is going to change on me, I probably wouldn't buy that 
asset.
    And as you know, we did not support the Madden decision. We 
have an NPR out that we think will modify this, and we are 
highly confident. There has been some action by a magistrate 
court last week on an 1848 law that we had provided them, and 
we are optimistic that we will get this resolved in 2020.
    Mr. Loudermilk. I appreciate that, especially with the 
patchwork of interest rates that we have State by State, which 
I, as a federalist, I do support the ability to do that, but 
you do have to have consistency, especially with low-dollar 
lending.
    And that is something that is very important, I believe, 
especially in today's environment, when there have been studies 
that have been out recently that 40 percent of American 
families could not afford a $1,500 emergency right now without 
borrowing the money. The problem is, we don't have access in 
many cases to go find sources for that money.
    And I appreciate your bulletin encouraging banks to get 
back to small-dollar lending, but that was almost 2 years ago, 
and we need a rulemaking. Can we expect the agencies to take 
action on small-dollar lending?
    Mr. Otting. You can, in 2020.
    Mr. Loudermilk. Okay. Thank you. That is very encouraging.
    I have a little bit of time left, so I do want to touch on 
something that I think others may have spoke about, which is 
the CRA.
    Mr. Otting. I just look forward to having a CRA 
modernization completion party and that we all can come 
together as a nation recognizing that. I think this rule will 
support rural America. It will support low- to moderate-income 
areas across this nation. And we can get the capital and 
lending out that those communities deserve today.
    Mr. Loudermilk. I agree that there is a lot that needs to 
be revised. And there seems to be--there is a fear of change in 
this City. We have seen it when technology companies have come 
in with new technology ideas. There is a fear of doing that, 
even though those technology companies often focus on the low- 
and moderate-income areas, or as a new term of banked or 
unbanked and underbanked.
    I also think that, unfortunately, you came in to do this 
during an election year. Had it not been an election year or, 
quite frankly, who appointed you to this position, you may have 
met with some criticism, but not the vitriol that you have 
right now.
    I encourage you to continue going with your patience and 
perseverance, because I think in the long run everyone will see 
that those that they are afraid of being harmed will actually 
be benefited from your actions.
    Mr. Otting. I agree.
    Mr. Loudermilk. Thank you. I yield back.
    Mr. Green. The gentleman yields back.
    Mr. Otting, thank you so much for appearing today. I will 
yield myself 5 minutes.
    Sir, you, on page 11 of your testimony, address the 
question of ``astroturfing.'' Are you familiar with the term in 
your testimony?
    Mr. Otting. I am.
    Mr. Green. And you focus on advocates who stuff the ballot 
box. Is there a reason why you have chosen ``advocates'' as a 
term for stuffing the ballot box?
    Mr. Otting. Is there a reason--
    Mr. Green. You focus on advocates. When you refer to 
advocates--
    Mr. Otting. No, we focus on everybody who wants to make a 
comment.
    Mr. Green. Okay. I am pleased to hear you say this because, 
as you know, you are affiliated with an entity that was once 
cited for stuffing the box, as you put it.
    Mr. Otting. That is not a true statement.
    Mr. Green. Okay. Would you kindly explain, please?
    Mr. Otting. Yes. This was by a group in northern California 
called the California Reinvestment Coalition. They made an 
accusation that OneWest Bank and myself were involved in that 
activity, and that is not true. That is slander on their part.
    We put a letter up on our website and said, look, if you 
want to be able to send something out to the regulators saying 
that OneWest Bank does a good job in their community, you can 
use this as a foundation, but we would encourage you to 
customize that.
    And they said CRC accused that some people submitted false 
letters. We were not involved in that process as all. I would 
never do something like that. And it is no different than the 
letter CRC sent out yesterday to their members saying, change 
the letterhead here and send this in to the OCC for comments.
    So we will see a lot of comments coming in from the 
California Reinvestment Coalition with a similar concept. But I 
can assure you, we would never do anything like that, nor would 
I ever participate in anything like that.
    Mr. Green. Thank you.
    Given your level of sensitivity to the issue, what have you 
done to prevent this from occurring?
    Mr. Otting. It is very difficult, to be honest with you, 
because the comment letters that come in, we accept anonymous 
comment letters through the process, but what we do is, all 
letters that come in, we log them in, we look at the issue, we 
decide if they are actionable, and then we spend time on those 
letters to understand. So it is a bit of a complicated issue 
that can occur with the way the structure of the system is 
today.
    Mr. Green. With limited time, do you give an admonition on 
your website?
    Mr. Otting. Do we give a what?
    Mr. Green. Do you give a warning, an indication, that this 
type of activity is unacceptable?
    Mr. Otting. We use the Federal system, and so this isn't an 
OCC system that we use, we actually use, where the proposed 
rule is posted and then the comments come in. And then we, just 
like everybody else, including yourself, if you would like to, 
can go in and look at the comments. And is there a warning on 
that system? There is not.
    Mr. Green. Okay. And would you propose having some sort of 
admonition? Would that be something appropriate?
    Mr. Otting. I think we all should have a responsibility 
that if you are submitting comments--
    Mr. Green. I am going to have to ask you if that is a yes 
or a no. Sometimes, I don't know whether people have said yes 
or no when they finish, so--
    Mr. Otting. The problem--and I would say yes, but here, if 
I could. I would be concerned that people wouldn't offer their 
comments if we required them to identify themselves.
    Mr. Green. Okay. I will accept your ``yes'' simply because 
I have another question.
    What do you think of the notion of auditing after?
    Mr. Otting. I think it is very difficult when you will 
accept anonymous letters from people.
    Mr. Green. If you audit not for the purpose of ascertaining 
who sent the information but for determining whether or not the 
information is so similar that you can conclude that it may not 
be information that is valid?
    Mr. Otting. We do that today. We categorize letters, was it 
a new issue or was it a letter that was produced by somebody 
and then mass produced by people and mailed in? We already do 
that today.
    Mr. Green. And what about technology, having the limited 
experience you have had and with the sensitivity--I knew you 
would be very sensitive, by the way--
    Mr. Otting. I am not sensitive to it. When someone 
challenges your character--
    Mr. Green. I would be, if I were--but, sir, I would be 
sensitive were I you, so do not be offended.
    But my point is, given your level of sensitivity, what 
about technology? Have you proposed any technology? You are in 
a key position to propose change, and I am trying to get some 
sense of what changes you would recommend.
    Mr. Otting. To be honest with you, this isn't an area I 
have spent a lot of energy on. We are generally the input 
version. We post the rule, the data comes in, we analyze the 
comments, and then make a determination if we want to modify 
the NPR based upon that. I am assuming this is probably 
something that should be taken up at a government-wide level 
because it is a government system.
    Mr. Green. We will. But I do thank you for your comments.
    My time has expired.
    Without objection, I will enter into the record two 
documents that appear to contradict the Comptroller's response 
to Chairwoman Waters' questions.
    The first is his own proposal, which states that a bank 
will get CRA credit for a ``loan to a family-owned corn and 
wheat farm with gross annual revenues of $10 million to 
purchase a tractor.''
    The second document is remarks made from FDIC Board Member 
Marty Gruenberg opposing the Comptroller's proposal, saying, 
``This proposal would allow a bank to achieve a less-than-
satisfactory rating in nearly half of its assessment areas and 
still receive a satisfactory or even outstanding rating.''
    Without objection, they will be placed in the record.
    Again, Mr. Otting, I thank you for your testimony.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place his responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
 This hearing is adjourned. Thank you, again.
 [Whereupon, at 1:26 p.m., the hearing was adjourned.]

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