OCC's Otting takes another swipe at Fed over CRA reform
WASHINGTON — Comptroller of the Currency Joseph Otting took another swipe at the Federal Reserve Thursday over efforts to modernize the Community Reinvestment Act, suggesting that the central bank was adopting the "partisan" stance held by one governor rather than that of the entire Fed board.
The Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. proposed a CRA reform plan in December that would revise banks' assessment boundaries and establish a new scoring metric for all of an institution's CRA activities, among other things. Yet the Fed, which has assigned Gov. Lael Brainard to coordinate its approach to CRA, refused to sign on to the plan over concerns about the scoring metric.
Asked about differences between the agencies over reforming the law, Otting appeared to suggest that Brainard — a Democratic appointee confirmed to a Fed seat under the Obama administration — was being given too much latitude to set the agency's approach.
“What I would say about the division on the issue is, people have to really understand the process,” Otting said at an event hosted by the National Diversity Coalition. "The process is, we went out and asked 37 questions, got feedback, took that feedback plus 1,500 comments, worked with the FDIC and the Fed, and the OCC to put together a notice of proposed rule. And then, we're unable to convince one governor to take it to the Board of Governors.”
He implied that Brainard's views were "partisan," saying, "I would say it's not the Fed — it's partisan within the Fed, also. Which is unfortunate and probably one of the things that's most disappointing to me.”
However, Fed Chair Jerome Powell has more than once endorsed his agency's approach. After Brainard gave remarks last month indicating there were substantive differences between the agencies over CRA scoring, Powell said in his regular press conference that he "was comfortable with [Brainard's] speech and I'm comfortable with the work we've done." In testimony on Capitol Hill, he later reiterated his support for the views that Brainard had outlined.
When the FDIC and OCC first unveiled the proposed changes to the CRA, the absence of the Fed's signature drew concern from the industry and lawmakers who said the agencies should take a consistent approach to reforming the law.
In January, Brainard laid out concerns with the OCC and FDIC’s scoring methodology in a speech at the Urban Institute, where she critiqued the proposal for potentially diluting the importance of community development activity in determining a bank’s CRA score. Otting later rejected that criticism in a meeting with reporters, saying that a policy speech is not the same thing as a proposal.
“If you really think about it, I could give a speech on tiddlywinks tomorrow,” Otting said at the time. A policy speech, Otting said, “doesn't take into account the combination of what it looks like to do it" in a notice of proposed rulemaking.