OCC chief says agency is close to proposing new CRA scoring benchmarks

WASHINGTON — The Office of the Comptroller of the Currency will soon propose a long-anticipated scoring framework to determine if a bank's Community Reinvestment Act activity meets minimum standards, said acting Comptroller Brian Brooks.

The proposal, a follow-up to the OCC's sweeping CRA reform rule issued in May, is expected within the next 10 days, Brooks said.

“In terms of starting our work, we now have a more or less completed draft of this document that is going through final internal review,” he said Monday during a virtual event hosted by the Women in Housing and Finance. “I would expect that's going to be released in the next week or 10 days, so that'll be up very soon.”

The new scoring thresholds are the final major piece of the OCC’s effort to modernize the law, which the agency has undertaken without the backing of the Federal Deposit Insurance Corp. and Federal Reserve. The OCC's rule had deferred actionpunted on its new framework’s scoring metrics for a later date, saying the agency required more information from the banking industry.

The scoring thresholds will ultimately determine the performance standards for banks to achieve either “satisfactory” or “outstanding” CRA ratings.

The regulatory filing will be a fully formed notice of proposed rulemaking, according to Brooks, as opposed to a more exploratory advance notice of proposed rulemaking.

“I don’t believe in waiting,” Brooks said. “I want to get straight to the chase.”

In its initial CRA reform proposal, released in December 2019, the OCC unveiled proposed benchmarks that would compare a bank’s CRA lending activity to its retail domestic lending activity in a given area. If a bank’s CRA lending constituted between 10% to 15% of its retail lending, it would achieve an “outstanding” rating, and a “satisfactory” rating if that percentage was between 5% and 10%.

However, shortly after the proposed rule was released, in January, the OCC issued a request for information for additional bank-specific data to help regulators determine the appropriate scoring thresholds, and the benchmarks did not appear in the OCC's final rulemaking in May.

Meanwhile, industry representatives have urged the three agencies to eventually come together on a joint final rule reforming the CRA. In late September, the Fed released a policy outline detailing its approach to modernizing the act, which featured substantial similarities as well as notable differences compared with the OCC’s approach.