OCC Publishes Newsletter Covering Revisions to the Community Reinvestment Act

WASHINGTON - National banks invested $638 million to revitalize and stabilize communities in the second quarter of 2006 just one year after revised Community Reinvestment Act regulations took effect, according to a new Office of the Comptroller of the Currency publication.

In its latest edition of "Community Developments Investments," the OCC highlights how changes promulgated by the OCC, the Federal Reserve, and the Federal Deposit Insurance Corporation give greater flexibility for banks to make investments to help distressed or underserved rural areas and federally designated disaster areas while reducing regulatory burden on banks with assets between $250 million and $1 billion.

During the first six months of this year (January 2006-June 2006), national banks have made $1.73 billion of "Part 24" investments, a 23 percent increase over the same time period in 2005.

Articles in this edition also discuss how banks and examiners are applying these new rules and how banks can satisfy the new CRA requirements. Key changes in the regulations that took effect last year include expanding the definition of "community development" and creating a new intermediate small bank test for banks with assets between $250 million and $1 billion.

Based on OCC guidance published in February 2006, one article specifically looks at the CRA consideration banks may receive when helping to rebuild communities after a disaster. That guidance further clarified that national banks could receive CRA credit for activities that help rebuild designated disaster areas even though the lender may be based outside the affected region. It also stated that national banks may receive consideration for activities benefiting people who have been displaced by natural disasters like Hurricane Katrina.

Over the last decade, national banks have used the Public Welfare Investment Authority, known as "Part 24," to invest more than $16 billion in community redevelopment.

"The Public Welfare Investment Authority has been so successful, both for banks and their communities they serve, that some banks are bumping up against the 10 percent limit," said Comptroller of the Currency John C. Dugan in a speech before a Washington D.C. community development corporation in June. "Fortunately, Congress is considering raising the limit to 15 percent - a change that has the potential to support as much as $30 billion in additional investment from national banks."

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