WASHINGTON, Sept. 8 (Reuters) – The U.S. Office of the Comptroller of the Currency on Wednesday proposed to repeal the recently updated fair lending rules, as the agency begins work on drafting new unified regulations with other banking supervisors.
Under the proposal, the OCC would revert to previous regulations of 1995 for the Community Reinvestment Act (CRA), a 1977 fair loan act.
The new proposal would see the OCC formally abolish new, more bank-friendly rules by early 2022, paving the way for the regulator, alongside the Federal Reserve and Federal Deposit Insurance Corporation (FDIC), to move forward. towards setting, updated rule.
âThis is a top priority for us, and we are moving at a deliberate speed,â Acting Controller Michael Hsu said in an interview. “We are signaling to people that we are going to do this thing.”
Under the CRA, banks are rated by regulators on how they support low-income communities in areas where they provide services, as policymakers have sought to ensure that banks do not exclude the poorest or minority communities for the benefit of a richer clientele.
The 2020 update, pushed by former Controller Joseph Otting, a Republican and former banking executive, gave banks more clarity and flexibility as to what they needed to do to get passing grades. But community groups feared it might have made it easier for banks to get regulatory approval while providing less support.
Hsu said the uneven economic toll from the COVID-19 pandemic underscores the need to update the ARC’s requirements to ensure that banks are doing all they can to support low-income communities, suggesting that he preferred a complete overhaul.
âWe have to do somethingâ¦ it’s time to really strengthen it and modernize it,â he said. “The status quo right now for this rule and where we are at is not acceptable.”
Hsu said regulators were meeting internal deadlines to rewrite the rule, but declined to provide more details on when the agencies plan to produce a new proposal.
The OCC shares responsibility for ARC enforcement with the Fed and FDIC, and banks were concerned that the 2020 update released only by the OCC would lead to an uneven regulatory landscape.
Hsu said the three agencies are already working on a joint proposal and there are no fundamental differences between them at this point.
“At a high level, the differences tend to be around technical issues so far,” he said.
Reporting by Pete Schroeder Editing by Chris Reese and Jonathan Oatis
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