Pub. 13 2018-2019 Issue 3

WWW.NEBANKERS.ORG 14 Counselor’s Corner — continued from page 13 While both Federal Reserve Vice Chairman for Supervision Randal Quarles and FDIC Chairman Jelena McWilliams have signaled their support for CRA reform, the fact that the Federal Reserve and FDIC did not join the OCC in issuing the ANPR possibly hints these regulators may not fully agree with the OCC’s approach to CRA reform. ings. Such amethod, according to the OCC, would bemore trans- parent and dynamic than the existing performance evaluation method. Evaluations would be tailored for a variety of factors including a bank’s size and business model, the demographic characteristics of the customer base, and unique economic and financial conditions in certain communities served by the bank. The OCC suggests that, under such a metric-based method, CRA-qualified activity could be represented as a dollar value and compared to several objective criteria, such as a bank’s total domestic assets, deposits, or capital. The ANPR solicits comments on how an alternative evalua - tion method should be designed and applied. (3) Redefining Communities and Assessment Areas Under current CRA regulations, a bank’s CRA performance evaluation is based primarily on the CRA-qualifying activi - ties that occur in or serve a bank’s assessment areas. Because these assessment areas are limited to the areas surrounding a bank’s main office, branch offices, and deposit-taking ATMs, the assessment areas of some banks may not include a sub- stantial portion of the areas in which they conduct activities. The ANPR solicits input on how a bank’s communities should be interpreted and assessed under a modernized CRA regula - tory framework. The ANPR suggests that under an updated framework, banks would continue to receive CRA consideration for qualifying activities within their branch and deposit-taking footprint, but could also receive consideration for providing services to LMI communities in other underserved areas outside of that footprint. For example, banks could include within their assessment areas those areas in which a bank has a concentration of loans or deposits, non-depository affiliate offices, or loan production offices. Such an updated approach to determining a bank’s assessment areas could, according to the OCC, address the criticism that the current framework restricts taking account of banks’ lending and investment activities in areas of need that are within the reach of a bank’s operations, but outside of delineated CRA assessment areas. Of note, the OCC recognized that expanding CRA credit beyond the current delineated assessment areas could help promote services and activities for remote rural populations. The ANPR also notes that an updated approach would be more accommodating for banks with no physical branches. (4) Expanding CRA-Qualifying Activities Some stakeholders expressed concerns about which activities receive CRA consideration. Hence, the ANPR invites comment on regulatory changes that could (a) ensure CRA consideration for a broader range of activities supporting community and economic development in banks’ CRA performance evaluations and (b) set clear standards for determining whether an activity qualifies for CRA consideration. In the ANPR, theOCC expresses its particular interest in the role of small business credit in LMI communities and under what circumstances a “small business loan” should receive CRA consideration. The ANPR also includes a number of specific questions regarding potential updates to the scope of CRA-qualifying activities, including, for example: whether certain categories of loans and investments should qualify for CRA consideration presumptively or, within such categories, only those that are defined as community or eco - nomic development by federal, state, local or tribal governments; whether banks’ expanded use of small and disadvantaged service providers should receive CRA consideration; the circumstances under which various forms of consumer lending (e.g. student, auto, or credit card) should receive CRA consideration; and the extent to which purchased loans and portfolio loans (as opposed to loans originated for subsequent sale) should be weighted dif- ferently for CRA purposes.