STOCK MARKET SNAPSHOT FOR 06/5/2022
A trio of U.S. banking regulators unveiled Thursday a renewed attempt to update fair lending rules for banks, with an eye toward modernizing the rules to reflect the rise of online banking while clarifying requirements for the industry.
The proposed update to rules enforcing the 1977 Community Reinvestment Act, which ordered banks to service lower-income communities where they operate, would expand access to credit band banking services for poorer communities and create a consistent metrics-based approach to grading banks, according to agency officials.
Regulators grade banks on how well they service lower-income communities where they operate, which in turn can impact their ability to merge with or acquire other firms.
The proposal would expand so-called “assessment areas” to include areas where banks have significant lending activity but no physical presence. The proposal would also allow banks to receive credit for serving rural areas, Native American areas, or other underserved regions outside their physical footprint.
The new proposal is significant in large part due to the fact that it was put forward by all three agencies charged with enforcing the CRA.
A previous attempt to update the rules under the Trump administration faltered as the agencies disagreed on the proper approach. The OCC and FDIC proposed an update in 2019, and only the OCC finalized a new set of rules in 2020, which was then scrapped under new leadership in 2021 as the agencies renewed efforts on a joint proposal.
Source: Reuters (Reporting by Pete Schroeder Editing by Chizu Nomiyama and Nick Zieminski)