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WASHINGTON, July 20 (Reuters) – A leading U.S. banking regulator on Tuesday announced that it would propose to reverse a 2020 update to a fair lending rule, and instead work with other regulators to establish a common rule.
The Office of the Comptroller of the Currency (OCC) has said it is preparing to remove the previous update to the Community Reinvestment Act (CRA) rules, saying uniform action among regulators is preferable. In a joint statement, the OCC, the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) said they have embarked on a joint rule-drafting effort to update the requirements of the 1977 Act. fair loans.
The Fed, FDIC, and OCC share responsibility for ARC enforcement, rating banks based on their support for low-income communities. The three agencies agreed that the rules needed to be updated, as they were last changed in 1995.
The latest announcement formalized the long-awaited decision by the Biden administration to abandon the previous rule-writing effort, which had been criticized by consumer advocates and banks for being rushed and rambling.
Michael Hsu, the acting chief of the OCC, said in a statement that the previous rule was a “false start”.
Under the leadership of former leader Joseph Otting, a Republican, the agency moved forward to update the rules on its own despite growls from banks who were not happy with the drafting of the rules.
The Trump administration has said that its 2020 update to the OCC rules is intended to give banks more clarity and flexibility about what activities they can do to achieve a passing grade with regulators. But some community and Democratic groups have warned it could allow banks to provide less support to low-income communities while still being in the good graces of regulators.
“It is high time that federal regulators finally demonstrate responsible government by modernizing the CRA for the first time in more than two decades,” said Richard Hunt, President and CEO of Consumer Bankers Association. (Reporting by Pete Schroeder; Editing by Leslie Adler and Aurora Ellis)