Release date: 11/20/2018
(RALEIGH) Attorney General Josh Stein today urged the Office of the Comptroller of the Currency (OCC) to maintain rules requiring banks to take steps to serve low- and moderate-income communities and protect against lending discrimination. The OCC’s proposed changes to the Community Reinvestment Act (CRA) would weaken oversight of bank compliance with the CRA and result in less access to banking services, loans, and investment for disadvantaged populations. “Discrimination in banking can make a huge difference in holding people back,” said Attorney General Josh Stein. “The CRA helps protect minorities and people with lower incomes. These safeguards can make a huge difference in families’ lives as they work to achieve homeownership, save for college, or start new businesses. I urge the OCC not to weaken these protections.”
The CRA was enacted in 1977 in response to banks’ persistent and systematic denial of access to credit for historically disadvantaged communities, often communities of color. Three federal financial regulators enforce the CRA: the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the OCC. Enforcement is carried out through the bank examination process, where these agencies periodically review how well banks have met the credit needs of the communities covered by the CRA.
In the letter, the 14 attorneys general urge the OCC to withdraw its proposal because the OCC:
- Neglected to include the Federal Reserve and the FDIC in forming its decision to roll back CRA oversight, despite these regulators’ shared responsibility for implementing the CRA.
- Implemented guidance that would weaken enforcement of credit discrimination and consumer protection laws through the CRA. The OCC states it will only consider the most egregious of violations in determining what affects a bank’s credit rating, which functionally eliminates penalties for violations.
- Proposes a rating system that removes examiners’ ability to qualitatively evaluate bank responsiveness to local credit needs.
- Fails to recognize the importance of community benefit agreements, which have led to billions of dollars in local community investment.
- Allows banks to achieve CRA compliance through lending and investments made in non-CRA communities.
- Fails to fix the loophole that allows bank affiliates, such as mortgage lenders, to escape CRA examination.
Attorney General Stein is joined in sending today’s letter by the Attorneys General of California, District of Columbia, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Virginia.
A copy of the letter can be found here.
Laura Brewer (919) 716-6484