The Office of the Comptroller of the Currency (OCC), the Federal agency that oversees national banks and savings associations, has just added support for community digital inclusion programs to its official list of “qualified activities” that could help a regulated bank meet its obligations under the Community Reinvestment Act (CRA).
In new rules issued today, OCC adopted three examples proposed by NDIA in its CRA Illustrative List, a detailed collection of “illustrative examples” of activities that could contribute to a finding that the bank is meeting its CRA obligations. The language of the three new examples is taken directly from comments submitted by NDIA in early April in response to a joint OCC/FDIC notice of proposed rulemaking aimed at “modernizing” CRA oversight.
The Community Reinvestment Act is the federal regulatory framework for ensuring that financial institutions provide equitable banking and credit services to all parts of their operating territories, especially low and moderate income (“LMI”) neighborhoods. CRA compliance reviews are part of the regular bank examination process conducted by OCC and the two other federal regulators (the Federal Reserve and the FDIC). Banks can satisfy their CRA obligations through a variety of “qualified activities”, including financial support for certain types of community services in LMI neighborhoods.
The broad categories of CRA “qualified activity” are described by the law, but the specifics — the types of community investment, service and philanthropy that will actually be recognized in judging an institution’s CRA compliance — are laid out in agency regulations, and through examples in the Illustrative List. Being included as an example in the List doesn’t mean a particular type of investment or community service support is required for CRA compliance, or even strongly favored by the regulator. But it does mean a bank can be confident that the activity — for example, a donation to a particular kind of community program in an LMI neighborhood — will receive credit from the OCC in determining the bank’s CRA rating for the year.
The three new examples of CRA-qualified activity proposed by NDIA, and now included in the OCC’s CRA Illustrative List, are:
- “Grant to a nonprofit community program which assists LMI individuals to find and enroll in free or low-cost home broadband internet services for which they are eligible” (page 11)
- “Grant in support of a nonprofit program which refurbishes used computers in order to provide them to LMI individuals at no cost or at a very low cost” (page 11)
- “Financial support of a nonprofit community program that provides digital literacy training to residents of an LMI neighborhood, in order to increase their ability to use online banking services”. (page 20)
As NDIA argued in our comments to the OCC, banks have every reason to support digital inclusion efforts in the communities they serve, including compelling business reasons to make sure all of their customers can use their online banking tools. After two months of COVID-closed bank lobbies and home sheltering, the critical importance of online financial access for every household, and the crippling gaps in that access for our lower-income and older neighbors, should be clear to us all.
Now the key bank regulatory agency has affirmed that banks’ support for digital inclusion programs serving low and moderate income residents, enabling those residents to use mainstream banking tools to manage their money, will contribute to positive Community Reinvestment Act compliance ratings.
The effective date of the OCC’s new rules appears to be October 1, 2020, but most banks won’t need to have their CRA compliance reporting and other systems ready to meet the new requirements until the beginning of 2023. In the interim, they can elect to report under the old or new rules. So it’s possible that banks with CRA reviews in 2021 will be able to take credit for digital inclusion support provided to community programs as soon as 2020. Stay tuned for more information about this.
In the meantime, NDIA urges our local affiliates and allies to make sure this information is shared with bank decision-makers in every community. Let us know if you need help.