House banking panel to hold two hearings this month on CRA reform plan
WASHINGTON — The House Financial Services Committee is scheduled to hold two hearings in January to examine a proposal to overhaul the Community Reinvestment Act, amid Democratic concerns that the plan would result in a weaker enforcement of the law.
The plan put forward by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. last month would revamp assessment boundaries, change criteria for what activities earn CRA credit and overhaul how banks are scored overall for their performance.
While Republicans applauded the proposal’s intention to provide institutions with more flexibility to serve their communities, Democrats and consumer groups worried the plan would dilute CRA-available resources in the areas that need them the most.
The House subcommittee on consumer protection and financial institutions is scheduled to hold the first hearing Jan. 14, titled “The Community Reinvestment Act: Reviewing Who Wins and Who Loses with Comptroller [Joseph] Otting’s Proposal.” The full committee will meet Jan. 29 for a hearing titled “The Community Reinvestment Act: Is the OCC Undermining the Law’s Purpose and Intent?”
The witnesses for those hearings have not yet been announced, although Waters, D-Calif., indicated in December that she would call Otting to testify before the committee. Waters led a group of Democrats to the FDIC meeting last month where the agency released the proposal in a sign she was watching regulators' activities closely.
The committee is also scheduled to hold a hearing Jan. 30 on so-called rent-a-bank schemes, in which lenders seek to partner with out-of-state banks to dodge interest rate caps, since depositories generally have the legal ability to apply their home states’ interest rate rules across the country.
In November, federal banking regulators proposed rules designed to make clear that interest rates permissible on bank loans would not be affected by their sale to a nonbank. While the proposal was widely seen as industry-friendly, the FDIC also stated that it views unfavorably firms that partner with a state bank solely with the goal of evading other states’ laws.