NEW YORK (AP) — The Trump administration is moving forward with its overhaul of the law that protects borrowers from discrimination by banks, despite both banks and community groups saying an major overhaul during a pandemic is poorly timed.
The Comptroller of the Currency said it had finalized on Wednesday its new regulations governing the Community Reinvestment Act, a 1970s law aimed at stopping redlining and bank discrimination against poor and low-income borrowers. The law hasn’t been updated since the 1990s, when online banking was in its infancy.
The core of the administration's overhaul deals with how the government will measure a bank’s lending and presence in low-income neighborhoods and communities of color. Under the current law, a bank’s compliance with the CRA largely depends on how a government examiner views a bank’s activities, whereas the new approach would use more qualitative measurements. Both banks and community groups agree on this approach.
What banks and community groups do not agree with is the timing of the change. The country is grappling with a historic pandemic that has caused millions of Americans to lose their jobs and banks are suddenly facing billions of dollars in losses from loans.
Banks have been asking publicly for more time to implement the Trump administration's changes, citing the pandemic, the millions of Americans behind on their debts, and that they're trying to underwrite loans for the Paycheck Protection program.
The Office of the Comptroller of the Currency is also moving alone with its change, leaving the two other regulators — the Federal Deposit Insurance Corporation and Federal Reserve — behind to come up with their own regulations for the CRA. The Fed has not been on board with the OCC’s approach for months. The FDIC has said it is focused on the pandemic.
For big changes like this, typically the three regulators would move together so not to cause confusion in the banking industry. This means that one bank could be regulated differently under the OCC's new rules while another bank could be using rules adopted by the FDIC or Fed.
Comptroller Joseph Otting has made overhauling the law his top priority. Several news outlets have reported that Otting plans to step down now that the rule is finalized. In a conference call with reporters Wednesday, OCC officials said Otting was “not available” and declined to discuss the reports.