On August 18, the OCC, the FDIC, and the Federal Reserve announced the availability of a 2015 data fact sheet on small business, small farm, and community development lending as reported by certain commercial banks and savings associations pursuant to the Community Reinvestment Act (CRA). Less comprehensive than the data reported pursuant to the Home Mortgage Disclosure Act, the CRA data includes the number and dollar amount of community development loans and small business and small farm loans originated or purchased. It also indicates whether a small business or farm loan is extended to a borrower with yearly revenues of $1 million or less and combines those loans into three categories based on size, which are reported at a census tract level. CRA data does not cover loan applications that were denied or applicant demographic information, and it is not completed on a loan-by-loan basis. According to the data fact sheet, “caution should be used in drawing conclusions from analyses using only CRA data, as differences in loan volume across areas may reflect differences in local demand for credit.”
On October 25, the National Community Reinvestment Coalition and community groups across the country sent a letter to the OCC explaining that they strongly oppose the consideration of a limited-purpose fintech charter by the bank regulator. The groups explained that they would consider supporting the limited-purpose chartering of a fintech firm “only if the OCC does not preempt strong state law and establishes vigorous supervision and regulation for the newly chartered institutions.” Additionally, the groups want chartered fintech firms to be subject to “rigorous Community Reinvestment Act (CRA)-like obligations” and “stringent” safety and soundness reviews. The letter argues that “new charter and receivership authority for uninsured institutions, primarily financial technology companies (fintechs), has the potential to benefit consumers and communities,” but only if accompanied by CRA-like obligations, and supervision and examination to ensure compliance with both fair lending and consumer protection laws.
On December 22, the Federal Reserve, the OCC, and the FDIC 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, 2016, a small bank or savings association will be defined as an institution that, as of December 31 of either of the past two calendar years, had assets of less than $1.216 billion. An intermediate small bank or intermediate small savings association will be defined as an institution with at least $304 million and less than $1.216 billion in assets as of December 31 of either of the past two calendar years. The agencies published the annual adjustments in the Federal Register on December 29, 2015.
District Court Invalidates NYC Ordinance Making Banks Service Under-Served Areas as Requirement to Receive Municipal Deposits
On August 7, the U.S. District Court for the Southern District of New York granted summary judgment for the New York Bankers Association (NYBA) in a case challenging the City of New York’s Local Law 38, entitled the Responsible Banking Act (RBA). New York Bankers Ass’n, Inc. v. City of New York, No. 15-CV- 4001, 2015 WL 4726880 (S.D.N.Y. Aug. 7, 2015). Passed in 2012, the RBA imposes various requirements on banks operating within New York City, including, as a prerequisite to receiving certain municipal deposits, requirements to document efforts to provide affordable housing, access to credit for small businesses, and other services. The court held that the RBA was preempted both by (i) federal law (including the National Bank Act, the Community Reinvestment Act, and OCC regulations) because, among other reasons, the RBA “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress”; and (ii) New York state law, because the New York Banking Law “evinces an intent to preempt the field of regulating state-chartered banks.” Thus, the RBA was “void in its entirety.”
On December 23, the SEC released its annual staff report on the findings of examinations of credit rating agencies registered as nationally recognized statistical rating organizations (NRSROs). As required by the Dodd-Frank Act, the SEC must examine each NRSRO at least once per year and provide a report summarizing its findings. As a result of the examinations, the staff recommended NRSROs improve a number of areas, including (i) the use of affiliates or third-party contractors in the credit rating process, (ii) management of conflicts of interest related to the rating business operations, and (iii) adherence to policies and procedures for determining or reviewing credit ratings. In addition, the agency issued a separate report to Congress on the state of competition, transparency, and conflicts of interest among NRSROs.