Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. bank regulator finalizes new community lending rule

Published 05/20/2020, 08:14 AM
Updated 05/20/2020, 09:46 AM
© Reuters. FILE PHOTO:  The spread of the coronavirus disease (COVID-19) in New York

© Reuters. FILE PHOTO: The spread of the coronavirus disease (COVID-19) in New York

By Pete Schroeder

WASHINGTON (Reuters) - A U.S. banking regulator announced on Wednesday it had finalized work on a long-running effort to change community lending standards for banks.

The new rule from the Office of the Comptroller of the Currency (OCC) is an update to requirements stemming from the 1977 Community Reinvestment Act, which requires banks to support lower-income borrowers and their communities, and for regulators to grade them on that effort.

The new rule, which does not take full effect until 2024, was a top priority for the OCC's chief, Joseph Otting. A former bank executive, Otting came to the job vowing to overhaul the rules, which were last updated in 1995. Multiple media reports said that Otting plans to soon step down from the post where he has served since 2017. An OCC spokesman declined to comment on the matter.

However, the overall fate of the rule is unclear. The OCC is one of three regulators responsible for enforcing the rule, alongside the Federal Deposit Insurance Corporation and Federal Reserve. Neither regulator joined the OCC in adopting the new rules on Wednesday, and the U.S. central bank has yet to even propose any changes.

Regulators with joint responsibility over a set of rules typically strive to adopt a consistent standard. But banks now will be split in terms of rules they must follow, depending on which regulator is in charge of overseeing them directly.

FDIC Chairman Jelena McWilliams said the agency was not prepared to similarly complete its rule rewrite, adding that smaller banks were already facing a "Herculean effort" in helping businesses weather a global pandemic.

© Reuters. FILE PHOTO:  The spread of the coronavirus disease (COVID-19) in New York

The new rule from the OCC is aimed at clarifying for banks what sorts of activities qualify for credit under the rule, and updating qualifying activities to better reflect how banks do business currently, after the industry complained for years the grading process was opaque.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.