WASHINGTON — Comptroller of the Currency Thomas Curry said Friday that policymakers will eventually have to re-evaluate the Community Reinvestment Act's approach to assigning assessment areas based on bank branches in light of the explosive growth of mobile banking.
Speaking before the annual conference of the National Community Reinvestment Coalition, Curry noted that the current assessment system, in which geographic boundaries determine whether a bank has a presence in a community or not, is essentially unchanged since the law was passed in 1977.
But Curry signaled that regulators, Congress and community groups may have to cast a broader net to account for mobile deposits or other technology that allows a bank to do business in an area without having a brick-and-mortar branch, which is currently the primary criterion for determining an assessment area.
"That's one of the policy issues we're all going to have to confront sooner or later," Curry said. "We're talking about a law that was adopted in 1977 … and a lot has changed. Policymakers, and I include NCRC, regulators and members of Congress, are really at some point going to have to address that issue of whether or not to broaden the geographic basis of the CRA."
Still, Curry was also emphatic in his declaration that bank branches remain a critical part of financial activity in any community and that fintech innovations are important, but are a long way from replacing physical branches. Small businesses and senior citizens continue to rely on bank branches, as do many customers who prefer to establish accounts in person, Curry said.
"I want to underscore my belief that technology may not be a substitute for a physical presence in low- and moderate-income communities," Curry said. "The presence of a branch is not just an essential vehicle for providing financial services, it is a stabilizing force that helps to determine whether communities thrive or just barely survive."
Curry also alluded to the continuing work by the OCC, Federal Deposit Insurance Corp. and Federal Reserve to update the interagency Question and Answer guidance outlining the agencies' process for considering whether banks have appropriately extended credit and services to low- and moderate-income communities in their assessment areas as required by the CRA.
While he did not specify when the Q&A would be published or what it might say, Curry did say that the OCC was "putting the finishing touches" on a white paper "describing our perspective on innovation in banking," including "the way that innovative products and services would be considered under" the community reinvestment law.
Community groups and some lawmakers have urged regulators to take a more aggressive approach to CRA requirements. Sen. Elizabeth Warren, D-Mass., and Rep. Elijah Cummings, D-Md., last May called on the Government Accountability Office to conduct an evaluation of the bank regulators' implementation of the CRA, a report that is expected to be published this summer. Last June, Fed Chair Janet Yellen said that regulators were looking to "improve" the implementation of the CRA by way of the Q&A revisions.
Meanwhile, community groups including the NCRC have focused their attention on blocking or at least winning CRA concessions from Goldman Sachs as it has applied to acquire $16 billion in online deposits from GE Capital, which is selling off its financial business in order to shed its designation as a systemically important financial institution by the Financial Stability Oversight Council. That application, which was first made last August, is still active and being considered by the Fed. The Fed declined to comment on that application.