[Federal Register Volume 83, Number 172 (Wednesday, September 5, 2018)]
[Proposed Rules]
[Pages 45053-45059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19169]



Office of the Comptroller of the Currency

12 CFR Parts 25 and 195

[Docket ID OCC-2018-0008]
RIN 1557-AE34

Reforming the Community Reinvestment Act Regulatory Framework

AGENCY: Office of the Comptroller of the Currency.

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The Office of the Comptroller of the Currency (OCC or agency) 
invites comments on this advance notice of proposed rulemaking (ANPR) 
to solicit ideas for building a new framework to transform or modernize 
the regulations that implement the Community Reinvestment Act of 1977 
(CRA). A new CRA regulatory framework would help regulated financial 
institutions more effectively serve the convenience and needs of their 
communities by encouraging more lending, investment, and activity where 
it is needed most; evaluating CRA activities more consistently; and 
providing greater clarity regarding CRA-qualifying activities. A 
transformed or modernized framework also would facilitate more timely 
evaluations of bank CRA performance, offer greater transparency 
regarding ratings, promote a consistent interpretation of the CRA, and 
encourage increased community and economic development in low- and 
moderate-income (LMI) areas. Revisions of this nature are consistent 
with the original intent of the CRA: To help meet the credit needs of 
the communities that banks serve. In addition, these types of revisions 
would align with the transformation of the banking industry and reduce 
the complexity, ambiguity, and burden associated with the regulations.

DATES: Comments on this ANPR must be received on or before November 19, 

ADDRESSES: Comments should be directed to:
    Commenters are encouraged to submit comments through the Federal 
eRulemaking Portal or email, if possible. Please use the title 
``Reforming the Community Reinvestment Act Regulatory Framework'' to 
facilitate the organization and distribution of the comments. You may 
submit comments by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
www.regulations.gov. Enter ``Docket ID OCC-2018-0008'' in the Search 
box and click ``Search.'' Click on ``Comment Now'' to submit public 
comments. Click on the ``Help'' tab on the Regulations.gov home page to 
get information on using Regulations.gov, including instructions for 
submitting public comments.
     Email: [email protected].
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2018-0008'' in your comment. In general, the OCC will 
enter all relevant comments received into the docket and publish your 
comment on the Regulations.gov website without change, including any 
business or personal information that you provide, such as name and 
address information, email addresses, or phone numbers. Comments 
received, including attachments and other supporting materials, are 
part of the public record and subject to public disclosure. Do not 
include any information in your comment or supporting materials that 
you consider confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically: Go to 
www.regulations.gov. Enter ``Docket ID OCC-2018-0008'' in the Search 
box and click ``Search.'' Click on ``Open Docket Folder'' on the right 
side of the screen. Comments and supporting materials can be viewed and 
filtered by clicking on ``View all documents and comments in this 
docket'' and then

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using the filtering tools on the left side of the screen. Click on the 
``Help'' tab on the Regulations.gov home page to get information on 
using Regulations.gov. The docket may be viewed after the close of the 
comment period in the same manner as during the comment period.
     Viewing Comments Personally: You may personally inspect 
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For 
security reasons, the OCC requires that visitors make an appointment to 
inspect comments. You may do so by calling (202) 649-6700 or, for 
persons who are deaf or hearing impaired, TTY (202) 649-5597. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and submit to security screening in order to 
inspect comments.

    OCC: Vonda J. Eanes, Director for CRA and Fair Lending Policy, 
Compliance Risk Policy Division, (202) 649-5470; Emily R. Boyes, Senior 
Attorney, (202) 649-6350, Karen E. McSweeney, Special Counsel, (202) 
649-5490, and Allison Hester-Haddad, Counsel, (202) 649-5490, Chief 
Counsel's Office; for persons who are deaf or hearing impaired, TTY 
(202) 649-5597; or Office of the Comptroller of the Currency, 400 7th 
Street SW, Washington, DC 20219.


I. Background and Introduction

    The Community Reinvestment Act of 1977 \1\ was enacted to encourage 
financial institutions \2\ (banks) to help meet the credit needs of the 
communities that they serve, including LMI neighborhoods, consistent 
with the banks' safe and sound operations. In passing the CRA, Congress 
established that (1) banks are required by law to demonstrate that 
their deposit facilities serve the convenience and needs of the 
communities in which they are chartered to do business; (2) the 
convenience and needs of communities include the need for credit 
services as well as deposit services; and (3) banks have a continuing 
and affirmative obligation to help meet the credit needs of the local 
communities in which they are chartered.\3\ The statute directed each 
appropriate federal financial supervisory agency (i.e., the OCC, the 
Board of Governors of the Federal Reserve System, and the Federal 
Deposit Insurance Corporation (collectively, agencies)) to assess the 
record of a bank in meeting the credit needs of its entire community, 
including LMI neighborhoods; \4\ take this record into account when 
evaluating the bank's application for a deposit facility; \5\ and 
report to Congress the actions it has taken to carry out its CRA 
responsibilities.\6\ The CRA directed each agency to publish 
regulations to carry out the statute's purpose.\7\

    \1\ Public Law 95-128, 91 Stat. 1147 (October 12, 1977), 
codified at 12 U.S.C. 2901 et seq.
    \2\ 12 U.S.C. 2902(2) defines ``regulated financial 
institution'' to mean an ``insured depository institution'' as 
defined in 12 U.S.C. 1813. Twelve U.S.C. 1813(c)(2) defines 
``insured depository institution'' to mean any bank or savings 
association whose deposits are insured by the Federal Deposit 
Insurance Corporation.
    \3\ 12 U.S.C. 2901(a).
    \4\ 12 U.S.C. 2903(a)(1).
    \5\ 12 U.S.C. 2903(a)(2).
    \6\ 12 U.S.C. 2904.
    \7\ 12 U.S.C. 2905.

    Since the CRA's enactment, Congress has amended the statute 
numerous times, including in the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 \8\ (which required public 
disclosure of a bank's CRA written evaluation and rating); the Federal 
Deposit Insurance Corporation Improvement Act of 1991 \9\ (which 
required the inclusion of a bank's CRA examination data in the 
determination of its CRA rating); the Riegle-Neal Interstate Banking 
and Branching Efficiency Act of 1994 \10\ (which (1) required an agency 
to consider an out-of-state national bank's or state bank's CRA rating 
when determining whether to allow interstate branches; and (2) 
prescribed certain requirements for the contents of the written CRA 
evaluation for banks with interstate branches); and the Gramm-Leach-
Bliley Act of 1999 \11\ (which, among other things, provided regulatory 
relief for smaller banks by reducing the frequency of their CRA 

    \8\ Public Law 101-73, 103 Stat. 183 (August 9, 1989).
    \9\ Public Law 102-242, 105 Stat. 2236 (December 19, 1991).
    \10\ Public Law 103-328, 108 Stat. 2338 (September 29, 1994).
    \11\ Public Law 106-102, 113 Stat. 1338 (November 12, 1999).

    In 1978, consistent with Congress' statutory directive, the 
agencies promulgated the first CRA regulations.\12\ They have since 
amended these regulations on several occasions, most significantly in 
1995 and 2005.\13\ In addition, the agencies have periodically 
published interpretations of the CRA regulations in the form of 
Interagency Questions and Answers Regarding Community Reinvestment (Q&A 

    \12\ 43 FR 47144 (October 12, 1978).
    \13\ 60 FR 22156 (May 4, 1995); 70 FR 44256 (August 2, 2005). 
Although adopted individually by each agency, the regulations have 
generally been drafted on an interagency basis and released jointly.
    \14\ The agencies have published the Q & A guidance for notice 
and comment prior to final publication in the Federal Register.

    The CRA requires each agency to prepare a written evaluation of a 
bank's record of meeting the credit needs of its entire community, 
including LMI neighborhoods, at the conclusion of its CRA 
evaluation.\15\ This report, known as a Performance Evaluation (PE), is 
required to be a public document that presents an agency's conclusions 
regarding a bank's overall performance for each ``assessment factor'' 
identified in the CRA regulations.\16\ A PE must also present facts and 
data supporting the agency's conclusions \17\ and contain both the 
bank's CRA rating and a description of the basis for the rating.\18\ A 
bank's CRA rating is considered, for example, in applications to merge 
or acquire another bank, open a branch, or relocate a main office or 
branch.\19\ A bank with a CRA rating below ``satisfactory'' may be 
restricted from certain activities until its next CRA evaluation, which 
is generally one or more years in the future.

    \15\ 12 U.S.C. 2906.
    \16\ 12 U.S.C. 2906(b)(1)(A)(i).
    \17\ 12 U.S.C. 2906(b)(1)(A)(ii).
    \18\ 12 U.S.C. 2906(b)(1)(A)(iii). There are four statutory 
rating categories: Outstanding, satisfactory, needs to improve, and 
substantial non-compliance (12 U.S.C. 2906(b)(2)).
    \19\ 12 CFR 25.29 and 195.29.

II. The Changing Banking Environment

    Over the past two decades, the financial services industry has 
undergone transformative changes, including the removal of bank 
interstate branching restrictions and the expanded role of technology 
in financial services. To better understand how banking products and 
services are delivered to consumers in this evolving industry and how 
these changes affect a bank's CRA performance, the agencies have 
solicited feedback from the banking industry, community groups, 
academics, and others (collectively, stakeholders) on several 
occasions. For example, in 2010, the agencies held a series of joint 
public hearings across the country and solicited written feedback 
regarding how to update the CRA regulations in light of, among other 
things, changes in how banking services were delivered to 

    \20\ See ``Agencies Announce Public Hearings on Community 
Reinvestment Act Regulations,'' Joint Press Release (June 17, 2010) 
(available at https://www.occ.gov/news-issuances/news-releases/2010/nr-ia-2010-65.html).

    From 2014 through 2016, the agencies again solicited feedback on 
the CRA, as part of the Economic Growth and

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Regulatory Paperwork Reduction Act of 1996 review,\21\ and received 
more than 60 comments about the CRA regulatory framework. These 
comments raised issues related to regulatory burden, as well as broader 
issues related to modernizing the CRA regulations and related Q&A 
guidance. During 2017 and 2018, the OCC held numerous meetings with 
bankers, community groups, non-profit organizations, legislators, and 
other stakeholders and regulators to discuss the current CRA regulatory 
framework and to solicit input on how to improve the current regulatory 

    \21\ See, e.g., 80 FR 7980 (February 13, 2015).

    During 2017 and 2018, the U.S. Department of the Treasury (Treasury 
Department) invited a diverse group of stakeholders to provide feedback 
on how the CRA regulations could more effectively encourage economic 
growth in the communities that banks serve.\22\ On April 3, 2018, the 
Treasury Department issued recommendations to the agencies for broad 
changes to the fundamental administration of the CRA based on the 
feedback it had received. Specifically, the Treasury Department 
recommended updating the approach to delineating assessment areas to 
reflect the changing nature of banking; improving the evaluation 
process to increase the timeliness of evaluations and enable greater 
accountability for banks' CRA activity planning; increasing the clarity 
and flexibility of CRA evaluations to foster transparency and 
effectiveness in CRA rating determinations; and incorporating 
performance incentives to encourage banks to meet the credit and 
deposit needs of their communities.\23\

    \22\ Memorandum from the U.S. Department of the Treasury to the 
Office of the Comptroller of the Currency, the Board of Governors of 
the Federal Reserve System, and the Federal Deposit Insurance 
Corporation (April 3, 2018) (available at https://home.treasury.gov/sites/default/files/2018-04/4-3-18%20CRA%20memo.pdf).
    \23\ Id. at 2.

    As the financial services industry continues to evolve, many 
stakeholders believe that the statutory purpose of the CRA--to 
encourage banks to help meet the credit needs of the communities they 
serve, including LMI areas, in a manner that is consistent with their 
safe and sound operation--is not fully or effectively accomplished 
through the current regulations. Although aspects of the current CRA 
regulatory framework may be sufficient for certain locally focused and 
less complex banks, stakeholders have expressed concern that the 
current CRA regulatory framework no longer reflects how many banks and 
consumers engage in the business of banking. Stakeholders have also 
identified concerns about the lack of clarity, consistency, and 
certainty with respect to current CRA regulatory requirements.

III. Objectives of the ANPR

    The OCC has reached out to and engaged with over 1,000 stakeholders 
on the existing CRA framework and whether it is meeting the credit 
needs of communities, given the changing landscape of the financial 
services industry and banking. The OCC's goal for issuing this ANPR is 
to obtain additional public input on how to revise the CRA regulations 
to encourage more local and nationwide community and economic 
development--and thus promote economic opportunity--by encouraging 
banks to lend more to LMI areas, small businesses, and other 
communities in need of financial services. The agency invites comments 
on how to revise the CRA regulations to bring greater clarity, 
consistency, and certainty to the evaluation process, as well as to 
provide flexibility to accommodate banks with different business 
strategies. The OCC also invites comments on how to update assessment 
area definitions to accommodate digital lending channels, while 
retaining a focus on the communities in which bank branches are 
located. Additionally, the agency invites comments on clarifying and 
broadening the range of activities supporting community and economic 
development that qualify for CRA consideration.
    The following sections of the ANPR invite comments from all 
stakeholders on changing the current approach to performance 
evaluations; developing metrics to increase the objectivity of 
performance measures; updating how communities and assessment areas are 
defined to accommodate banks with different business strategies and 
allow banks to help meet the needs of underserved communities; 
broadening the range of qualifying activities to better support the 
purpose of the CRA; and enhancing recordkeeping and reporting. The OCC 
invites all comments and suggestions for other ways to improve the CRA 
regulatory framework.

IV. Current CRA Regulatory Approach

A. Current Performance Evaluation Methods

    The OCC's current CRA regulations provide different methods to 
evaluate a bank's CRA performance depending on the bank's asset size 
and business strategy.\24\ Some stakeholders have expressed the view 
that the current regulatory framework is too complex, the asset 
thresholds for the performance tests and standards have not kept pace 
with bank asset sizes, and the standards are not applied transparently 
or consistently in performance evaluations.

    \24\ The asset sizes are adjusted annually based on the Consumer 
Price Index.

    Under the current framework,
     small banks (banks with less than $313 million in assets) 
are evaluated under a retail lending test that may also consider 
community development (CD) loans. CD investments and services may be 
considered for an outstanding rating at the bank's option, but only if 
the bank meets or exceeds the lending test criteria in the small bank 
performance standards.
     intermediate small banks (ISB) (banks with asset sizes 
between $313 million and $1.252 billion) are evaluated under the retail 
lending test for small banks and a CD test. The ISB CD test evaluates 
all CD activities together.
     large banks (banks with more than $1.252 billion in 
assets) are evaluated under the lending, investment, and service tests. 
The large bank lending and service tests consider both retail and CD 
activity, while the investment test focuses on qualified CD 
     wholesale and limited purpose banks are evaluated under a 
CD test that considers activities in a much broader geographic area 
than the area that is considered for large banks or ISBs.
     a bank whose business predominantly consists of serving 
the needs of military personnel who are not located within a defined 
geographic area is evaluated under the performance test or standards 
applicable to its size and business model; such a bank, however, may 
delineate its entire deposit customer base as its assessment area.
     any bank can elect to be evaluated under a strategic plan 
that sets out measurable, annual goals for lending, investment, and 
service to achieve a satisfactory or outstanding rating. A strategic 
plan must be developed with community input and approved by the bank's 
primary regulator.
    Additionally, although the small bank, ISB, and large bank lending 
tests share some common elements, other elements are unique to each 
test. For example, to facilitate the evaluation of performance under 
the large bank lending test, the CRA regulations require that certain 
data on small business, small farm, and CD loans be collected and 
reported annually. Small

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banks and ISBs are not required to report this data.
    Finally, the OCC also considers applicable performance context 
information to inform its conclusions and CRA ratings in all cases.

B. Community and Assessment Areas

    The CRA statute does not define ``community.'' The statute requires 
the OCC to state conclusions, supported by facts and data, on banks' 
performance in metropolitan areas and--for banks with branches in more 
than one state--in the nonmetropolitan area of a state where a bank has 
one or more domestic branches.\25\

    \25\ 12 U.S.C. 2906(b)(1)(B), (d)(3)(A). ``Domestic branch'' is 
defined as any bank branch office or other bank facility that 
accepts deposits, located in any state (12 U.S.C. 2906(e)(1)). For 
banks that maintain domestic branches in two or more states, the OCC 
must prepare separate written evaluations of performance in each 
state in which banks maintain one or more domestic branches. For 
banks that maintain domestic branches in two or more states within a 
multistate metropolitan area, the OCC must prepare a separate 
written evaluation of performance within the multistate metropolitan 
area (12 U.S.C. 2906(d)(1)(B), (d)(2)).

    The current CRA regulations also do not expressly define 
``community''; they implement the concept by requiring a bank to 
delineate one or more ``assessment area(s)'' in which the agency 
evaluates the bank's record of helping to meet the credit needs of its 
``community.'' \26\

    \26\ 12 CFR 25.41 and 195.41.

    The current CRA regulations specify what must be and what cannot be 
included in the assessment area delineation. The current interpretation 
of the regulations limits assessment area(s) to the area(s) surrounding 
a bank's main office, branch offices, and deposit-taking automated 
teller machines (ATMs).
    A bank's CRA performance evaluation is based primarily on the CRA-
qualifying activities that occur in or serve a bank's assessment 
area(s). For some banks, their assessment area(s) may not include a 
substantial portion of the area(s) in which they conduct activities 
that would otherwise qualify for CRA consideration. The activities that 
occur outside of the bank's assessment area that do not have a purpose, 
mandate, or function of serving the bank's assessment area generally 
will not receive consideration unless the agency concludes that the 
bank has been responsive to the needs of its assessment area(s). Even 
then, the current CRA regulations and Q&A guidance generally limit 
consideration of CD activities to the broader statewide or regional 
areas that includes the bank's assessment area(s).\27\ Stakeholders 
have expressed concern that, in practice, the lack of clarity in the 
regulations and guidance limits banks' willingness or ability to engage 
in CD activities outside of their assessment area(s).

    \27\ See Q & A guidance Sec.  _.12(h)-6. For banks evaluated 
pursuant to the CD test for wholesale or limited purpose banks, the 
agencies also consider qualified investments, CD loans, and CD 
services that benefit areas outside the bank's asessment area(s), if 
the bank has adequately adressed the needs of its assessment area(s) 
(12 CFR 25.25(e)(2) and 195.25(e)(2)).

    The current assessment area definition was developed when banking 
was based largely on physical branch locations as the primary means of 
delivering products and services. While some banks continue to conduct 
most of their CRA-qualifying activities within their assessment 
area(s), in part because of the current framework for evaluating CRA 
performance, banking has evolved and the cost of operating branches has 
increased. Changes in the industry offer more opportunities for banks 
to engage in business outside of the geographies surrounding physical 
branches. Numerous factors, including technological advances in the 
delivery of banking services, shifting business models, and changes in 
consumer behavior and preferences permit banks to engage in the 
business of banking regardless of whether they have branches or, if 
they do, the location of their branches.

C. Questions Regarding Current Regulatory Approach

    The OCC invites comments on changes to transform or modernize the 
current CRA regulatory framework, including with respect to the 
following questions:
    1. Are the current CRA regulations clear and easy to understand?
    2. Are the current CRA regulations applied consistently?
    3. Is the current CRA rating system objective, fair, and 
    4. Two goals of the CRA are to help banks effectively serve the 
convenience and needs of their entire communities and to encourage 
banks to lend, invest, and provide services to LMI neighborhoods. Does 
the current regulatory framework support these goals in light of how 
banks and consumers now engage in the business of banking?
    5. With the statutory purpose of the CRA in mind, what aspects of 
the current regulatory framework are most successful in achieving that 
    6. If the current regulatory framework is changed, what features 
and aspects of the current framework should be retained?

V. A Modernized CRA

A. Revising or Transforming the Current Regulatory Approach

1. Revising the Current Performance Evaluation Method
    The OCC invites comments on ways to modernize the current 
regulatory framework by modifying and streamlining the existing CRA 
performance tests, such as by implementing an alternative evaluation 
method or by increasing and enhancing the use of metrics within the 
performance tests. One such alternative evaluation method could replace 
existing performance tests and standards and separately evaluate retail 
or CD activities for all banks, accounting for variations in size, 
business model, and other factors. This approach could include updated 
metrics that take into account information on a bank's performance 
context, such as the demographic characteristics and the economic and 
financial conditions of specific communities.
2. Metric-Based Framework
    The OCC also invites comments on a more transformational approach 
to the CRA regulatory framework that could (1) increase the 
transparency of how a bank's CRA performance is evaluated by using 
quantitative benchmarks for specific ratings and clear standards for 
quantifying CRA activities; (2) define ``community'' more broadly to 
include additional domestic geographies in which the bank engages in 
the business of banking; and (3) expand the types of activities that 
would receive CRA consideration in a CRA evaluation, with a focus on 
lending, investments, and services for LMI geographies and individuals 
and other geographies and populations in need of financial services. 
Such an approach could simplify and improve the implementation of the 
CRA while better effectuating the law's directive to encourage banks to 
serve their entire communities, including LMI neighborhoods, consistent 
with safe and sound operations.
    One approach is to create a metric-based performance measurement 
system with thresholds or ranges (benchmarks) that correspond to the 
four statutory CRA rating categories.\28\ These benchmarks could 
represent the overall or ``macro'' benchmarks for obtaining a

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particular rating and could be composed of the ``micro'' components of 
CRA qualifying lending, investments, and services. These components 
could be aggregated to achieve the overall benchmark or level of 
performance. This approach would allow flexibility to accommodate bank 
capacity and business models while facilitating the comparison among 
banks of all sizes and business models and the evaluation against an 
objective, transparent threshold.

    \28\ As noted in footnote 18, the four statutory rating 
categories are outstanding, satisfactory, needs to improve, and 
substantial non-compliance (12 U.S.C. 2906(b)(2)).

    In a metric-based framework designed to bring clarity to the 
determination of CRA ratings, the benchmarks representing the dollar 
value of CRA-qualified activity could be compared to readily available 
and objective criteria, such as, a percentage of domestic assets, 
deposits, or capital from the bank's balance sheet, to calculate a 
ratio that could correspond to the benchmark established for each 
rating category. For example, a bank with $1 billion in total assets 
that conducted $100 million of CRA-qualifying activities in the 
aggregate would achieve a 10-percent ratio, if total assets were used 
for the denominator.
    The OCC invites comments on the above approaches, including with 
respect to the following questions:
    7. How could an alternative method for evaluating CRA performance 
be applied, taking into account the following factors: bank business 
model, asset size, delivery channels, and branch structure; measures or 
criteria used to evaluate performance, including appropriate metrics; 
and consideration for qualifying activities that serve areas outside a 
bank's delineated assessment areas?
    8. How could appropriate benchmarks for CRA ratings be established 
under a metric-based framework approach, taking into account balance-
sheet items, such as assets, deposits, or capital and other factors, 
including business models?
    9. How could performance context be included in such a metric-based 
    10. In a metric-based framework, additional weight could be given 
to certain categories of CRA-qualifying activities, such as activities 
in certain geographies, including LMI areas near bank branches; 
activities targeted to LMI borrowers; or activities that are 
particularly innovative, complex, or impactful on the bank's community. 
How could a metric-based framework most effectively apply different 
weighting to such categories of activities? For example, should a $1 
loan product count as $1 in the aggregate, while a $1 CD equity 
investment count as $2 in the aggregate?
    11. How can community involvement be included in an evaluation 
process that uses a metric-based framework?
    12. For purposes of evaluating performance, CD services are not 
currently quantified in a standard way, such as by dollar value. Under 
a metric-based framework, how should CD services be quantified? For 
example, a bank could calculate the value of 1,000 hours of volunteer 
work by multiplying it by an average labor rate and then include that 
number in the aggregate total value of its CRA activity.
3. Redefining Communities and Assessment Areas
    To recognize evolving banking practices, the OCC invites comments 
on ways to update how a bank's community is interpreted for purposes of 
implementing the CRA. Under an updated approach, banks would continue 
to receive consideration for CRA-qualifying activities within their 
branch and deposit-taking ATM footprint and could receive consideration 
for providing these types of beneficial activities in LMI areas outside 
of their branch and deposit-taking ATM footprint and other underserved 
areas. An updated approach to defining assessment areas could allow a 
bank to include additional areas tied to the bank's business operations 
(e.g., areas where the bank has a concentration of deposits or loans, 
non-bank affiliate offices, or loan production offices). Under such an 
approach, banks could include these additional geographies in their 
assessment areas, enabling consideration of CRA-qualifying activities 
conducted within these areas. Such an approach could address concerns 
that the current CRA assessment areas can restrict bank lending or 
investment in areas of need, by expanding the circumstances in which 
banks receive consideration for CRA-qualifying activities beyond their 
delineated assessment areas. Providing consideration for activities 
conducted in targeted areas or areas that have historically been 
largely excluded from consideration such as remote rural populations or 
Indian country, for example, could help promote services and activities 
in those areas as well. It may also accommodate banks that either 
operate with business models that have no physical branches or banks 
with services that reach far beyond the geographic location of their 
physical branches. While the OCC would continue to assess CRA 
performance as required by statute, qualifying activities outside of 
the areas where a bank has its main office, branch offices, and 
deposit-taking ATMs could be considered and assessed in the aggregate, 
at the bank level, in addition to activities in its traditional 
assessment areas or local geographies.
    The OCC invites comments on this approach, including with respect 
to the following questions:
    13. How could the current approach to delineating assessment areas 
be updated to consider a bank's business operations, in addition to 
branches and deposit-taking ATMs, as well as more of the communities 
that banks serve, including where the bank has a concentration of 
deposits, lending, employees, depositors, or borrowers?
    14. Should bank activities in the LMI geographies surrounding 
branches and deposit-taking ATMs, or in other targeted geographic 
areas, be weighted (and if so, how), or should some other approach be 
taken to ensure that activities in those areas continue to receive 
appropriate focus from banks, such as requiring banks to have some 
minimum level of performance in the metropolitan statistical area (MSA) 
and non-MSA areas in which they have domestic branches before receiving 
credit for activity outside those areas?

B. Expanding CRA-Qualifying Activities

    The OCC invites comments on the type and categories of activities 
that should receive CRA consideration. Within the current regulation's 
performance tests and standards, CRA activities are generally 
considered in two categories--retail and CD--with the objective of 
encouraging banks to engage in a broad range of CRA-qualifying 
activities that are within LMI and other areas specified in the 
regulations and that benefit LMI individuals, small businesses, and 
small farms. For the most part, CRA-qualifying activities are defined 
by the regulations and further described in the Q&A guidance. The 
statute, however, requires the agencies to consider low-cost education 
loans provided to low-income borrowers, and it permits the agencies to 
consider activities undertaken by a non-minority-owned bank in 
conjunction with a minority- or women-owned bank or low-income credit 
union (MWLI), provided these activities benefit the MWLI's local 
    Some stakeholders have expressed concerns about which activities 
receive CRA consideration. These stakeholders generally express a 
desire for more clarity and certainty regarding which CD, small 
business, lending, and retail service activities will receive CRA 

[[Page 45058]]

    The OCC invites comments on regulatory changes that could ensure 
CRA consideration for a broad range of activities supporting community 
and economic development in banks' CRA performance evaluations, while 
retaining a focus on LMI populations and areas, and set clear standards 
for determining whether an activity qualifies for CRA consideration. 
The OCC recognizes that providing greater clarity on qualifying 
activities could be beneficial in supporting the goals of the CRA for 
all banks, including those with more traditional business models.
    Additionally, under the current regulatory framework banks receive 
CRA consideration for certain small business loans. The CRA regulatory 
definition of a small business loan mirrors the definition found in 
bank Call Reports.\29\

    \29\ Loans to small businesses are defined as those with 
original amounts of $1 million or less reported on the institution's 
Call Report as either ``loans secured by nonfarm residential 
property'' or ``commercial and industrial loans.'' In addition to 
receiving consideration for business loan in amounts of $1 million 
or less, a bank may also receive CRA consideration for business 
loans of more than $1 million if the loan has a primary purpose of 
``community development'' as that term is defined in the CRA 

    The OCC also considers whether a large bank uses innovative or 
flexible lending practices in addressing the credit needs of LMI 
borrowers or geographies. Depending on the facts and circumstances, a 
bank that develops a unique approach or lending program targeted to 
support the needs of borrowers or small businesses in LMI geographies, 
LMI borrowers, or small businesses may be eligible to receive 
consideration under CRA for those activities.
    The OCC invites comments on the role of small business credit in 
LMI areas or for LMI small business owners, and under what 
circumstances small business loans should receive CRA consideration.
    The OCC invites comments on qualifying activities, including with 
respect to the following questions:
    15. How should ``community and economic development'' be defined to 
better address community needs and to incentivize banks to lend, 
invest, and provide services that further the purposes of the CRA? For 
example, should certain categories of loans and investments be presumed 
to receive consideration, such as those that support projects, 
programs, or organizations with a mission, purpose, or intent of 
community or economic development; or, within such categories, only 
those that are defined as community or economic development by federal, 
state, local, or tribal governments?
    16. Should there be specific standards for CD activities to receive 
consideration, such as requiring those activities to provide identified 
benefits to LMI individuals and small business borrowers or to lend to 
and invest in LMI communities or other areas or populations identified 
by federal, state, local, or tribal government as distressed or 
underserved, including designated major disaster areas (hereinafter 
referred to as ``other identified areas'' or ``other identified 
    17. Are there certain categories of CD activities that should only 
receive consideration if they benefit specified underserved populations 
or areas, such as providing credit or technical assistance to small 
businesses or small farms; credit or financial services to LMI 
individuals or other identified populations (such as the disabled); or 
social services for LMI individuals or job creation, workforce 
development, internships, or apprentice programs for LMI individuals or 
other identified populations?
    18. Should consideration for certain activities that might 
otherwise qualify as CD be limited or excluded? For example, how should 
investments in loan-backed securities be considered?
    19. How should financial education or literacy programs, including 
digital literacy, be considered?
    20. Should bank activities to expand the use of small and 
disadvantaged service providers receive CRA consideration as CD 
    21. The current regulatory framework provides for CRA performance 
evaluations to consider home mortgage, small business, and small farm 
lending, and consumer lending in certain circumstances. Should these 
categories of lending continue to be considered as CRA-qualifying 
activities or should consideration in any or all of these categories be 
limited to loans to LMI borrowers and loans in LMI or other identified 
    22. Under what circumstances should consumer lending be considered 
as a CRA-qualifying activity? For example, should student, auto, credit 
card, or affordably priced small-dollar loans receive consideration? If 
so, what loan features or characteristics should be considered in 
deciding whether loans in these categories are CRA-qualifying?
    23. Under what circumstances should small business loans receive 
CRA consideration? For example should consideration be given to all 
loans to businesses that meet the Small Business Administration 
standards for small businesses?
    24. How should small business loans with a CD purpose be 
    25. Should a bank's loan purchases and loan originations receive 
equal consideration when evaluating that bank's lending performance?
    26. Should loans originated by a bank to hold in portfolio be 
weighted differently from loans originated for sale? If so, how?
    27. Should bank delivery channels, branching patterns, and branches 
in LMI areas be reviewed as part of the CRA evaluations? If so, what 
factors should be considered?
    28. The CRA states that the agencies may take into consideration in 
the CRA evaluation of a non-minority-owned and non-women-owned 
financial institution (majority-owned institution) any capital 
investment, loan participation, and other venture undertaken in 
cooperation with MWLIs, even if these activities do not benefit the 
majority-owned institution's community, provided that these activities 
help meet the credit needs of local communities in which the MWLIs are 
chartered. What types of ventures should be eligible for such 
consideration, and how should such ventures be considered?

C. Recordkeeping and Reporting

    The OCC also invites comments on how to modernize CRA regulations 
to promote transparency and consistency in recordkeeping, reporting, 
and examination requirements. The current regulatory approach does not 
facilitate regular tracking, monitoring, and comparisons of levels of 
CRA performance by banks and other stakeholders. One advantage of a 
modernized CRA framework that uses objective reportable metrics could 
be to allow for better tracking by banks of their overall CRA level of 
performance on a regular, periodic basis. If a metric-based framework 
and clarified standards for identifying and measuring qualifying 
activities were implemented, such an approach could also allow 
stakeholders to better understand the level of a bank's CRA performance 
on a straightforward and timely basis.
    This type of framework may involve an updated approach to the OCC's 
CRA-related data collection to be used for monitoring and assessing 
banks' CRA performance. Additionally, under a metric-based framework, 
the ability to differentiate among activities based on their location, 
type, or other factors may involve additional recordkeeping and 
    Such reporting could also support comparison among banks, their 
peer groups, or the entire industry and would

[[Page 45059]]

support understanding of industry-wide activity and trends.
    The OCC invites comments on CRA recordkeeping and reporting 
requirements. The OCC notes that additional feedback on recordkeeping 
and reporting may be necessary if a new framework is proposed in a 
future rulemaking.
    29. Could the reporting of data gathered using a metric-based 
approach on a regular, periodic basis better support the tracking, 
monitoring, and comparison of CRA performance levels?
    30. How frequently should banks report CRA activity data for the 
OCC to evaluate and report on CRA performance under a revised 
regulatory framework?
    31. As required by law, and to the extent possible, the OCC 
attempts to minimize regulatory burden in its rulemakings consistent 
with the effective implementation of its statutory responsibilities. 
The OCC is committed to evaluating the economic impact of, and costs 
and benefits associated with, any changes that are proposed to the CRA 
regulations. Under the current regulatory framework, what are the 
annual costs, in dollars or staff hours, associated with CRA-related 
data collection, recordkeeping, and reporting?

D. Additional Options or Approaches

    The OCC invites other ideas and options for modernizing the CRA 
regulatory framework not identified in this ANPR.

    Dated: August 28, 2018.
Joseph M. Otting,
Comptroller of the Currency.
[FR Doc. 2018-19169 Filed 9-4-18; 8:45 am]