On November 15, the Federal Reserve Board, the FDIC, and the OCC finalized revisions to the “Interagency Questions and Answers Regarding Community Reinvestment” (Q&As). The agencies adopted the revisions largely as proposed, with some minor changes in response to comments. The new Q&As, which include revisions to five questions and answers and two new questions, generally are intended to: (i) clarify how the agencies consider community development activities that benefit a broader statewide or regional area that includes an institution’s assessment area; (ii) provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds; (iii) clarify the consideration of certain community development services, such as service on a community development organization’s board of directors; (iv) address the treatment of loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investment to support a community development purpose; and (v) clarify that community development lending performance is always a factor considered in a large institution’s lending test rating. The new Q&As take effect when they are published in the Federal Register.
On December 13, the Federal Reserve Board, the FDIC, the OCC, and the NCUA issued an interagency statement to clarify safety and soundness expectations and CRA considerations in light of the CFPB’s ability-to-repay/qualified mortgage rule. The statement emphasizes that institutions may originate both QM and non-QM loans based on their business strategies and risk appetites and that residential mortgage loans “will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.” Acknowledging that some institutions may choose to originate only or predominantly QM loans, the agencies state that, consistent with recent guidance concerning the fair lending implications of QM-only lending, “the agencies that conduct CRA evaluations do not anticipate that institutions’ decision[s] to originate only QMs, absent other factors, would adversely affect their CRA evaluations.”
On March 18, the Federal Reserve Board, the FDIC, and the OCC proposed revisions to the “Interagency Questions and Answers Regarding Community Reinvestment” (Q&As). Focused primarily on community development, the revised Q&As aim to (i) clarify how the agencies consider community development activities outside an institution’s assessment area, both in the broader statewide or regional area and in nationwide funds, (ii) clarify how to determine whether recipients of community services are low- or moderate-income; (iii) explain the consideration of certain community development services, (iv) address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose, and (v) clarify that community development lending should be evaluated in such a way that it may have a positive, neutral, or negative impact on the large institution lending test rating. In remarks to the National Community Reinvestment Coalition on March, 20, 2013, Comptroller Thomas Curry described the proposed changes and stressed that they are the first steps the agencies will take to address issues raised during a 2010 outreach effort to reappraise the CRA and identify gaps between CRA implementation and changes in the structure of the banking industry, and how customers access and use credit and financial products. Mr. Curry also promised training and revised examination procedures to ensure more consistent application of CRA rules. The agencies will accept comments on the revisions for 60 days following publication in the Federal Register.
On December 19, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly announced the adjusted thresholds for asset size used to define small and intermediate small banks and savings associations under the Community Reinvestment Act. Effective January 1, 2013, a small bank or savings association will mean an institution that, as of December 31 of either of the past two years, had assets of less than $1.186 billion. An intermediate small bank or savings association will mean an institution with assets of at least $296 million as of December 31 of both of the prior two years, and less than $1.186 billion as of December 31 of either of the prior two years.
On May 15, the cities of New York and Los Angeles adopted ordinances that will require banks doing business with those cities to report certain information about their banking and lending activities. In New York, the City Council adopted a Local Law that, once approved by the mayor or passed over the mayor’s veto, will establish a community investment advisory board comprised of city officials, banking industry representatives, community development or consumer protection groups, and small business owners. The board will assess the banking needs of the city and evaluate the performance of the city’s depository banks in meeting those needs. To conduct the assessment and evaluation, the board will collect from depository banks information regarding each institution’s efforts to, among other things, (i) meet small business credit needs, (ii) conduct consumer outreach and other steps to provide mortgage assistance and foreclosure prevention, and (iii) offer financial products for low and moderate income individuals throughout the city. The board will be required to publish the information collected and prepare an annual report, which city officials can consider in deciding with which institutions the city will place its deposits. The ordinance adopted by the Los Angeles City Council establishes a monitoring program headed by the City Treasurer. Under the program, a depository bank doing business with the city or wishing to do so will be required to report each year information regarding its small business, mortgage, and community development lending, as well as information about its participation in foreclosure prevention and principal reduction programs. Investment banks will be required to file a statement describing their corporate citizenship in areas such as participation in charitable programs or scholarships and internal policies regarding the utilization of subcontractors designated as women-owned, minority-owned, or disadvantaged businesses. The disclosures will be posted online for public viewing within 30 days of the beginning of each new fiscal year. The cities of Cleveland, Pittsburgh, Philadelphia, and San Diego already have laws in place designed for the same general purposes, and other cities are considering similar laws.