OCC 2005-43 OCC Bulletin Subject: Community Reinvestment Act Description: Notice and Request for Comment Date: December 6, 2005 TO: Chief Executive Officers and Compliance Officers of All National Banks, Department and Division Heads, All Examining Personnel, and Other Interested Parties On November 10, 2005, the Office of the Comptroller of the Currency, along with the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, (the agencies) published in the Federal Register a notice and request for comment regarding proposed revisions to the "2001 Interagency Questions and Answers Regarding Community Reinvestment." 1 These Interagency Questions and Answers are the agencies' primary vehicle for disseminating guidance interpreting the Community Reinvestment Act (CRA) regulations. The agencies are proposing these revisions to provide guidance on recent substantive changes to the CRA regulations.2 Comments are requested by January 9, 2006. Thirteen new questions and answers are being published for comment. Of these new questions and answers, seven address the revised definition of community development; three address the new community development test for intermediate small banks; and the remaining three address consideration of prior-period qualified investments for any size bank, treatment of small banks' affiliate activities, and adjustments in the small bank asset threshold. The seven new questions and answers concerning community development: 1. Clarify that the revised definition of community development applies to all banks, not just to intermediate small banks. See __ .12(g)(4)-1. 2. Discuss the meaning of a designated disaster area and propose a one-year "lag period" during which a bank may continue to receive consideration for activities in a disaster area for which the federal or state designation has expired. See __ .12(g)(4)(ii)-1. 3. Explain that all revitalization activities in designated disaster areas are not considered equally, and include a statement regarding loans to individuals displaced by a disaster. See __ .12(g)(4)(ii)-2. 4. Describe the criteria that the agencies use to identify distressed or underserved nonmetropolitan middle-income geographies. See __ .12(g)(4)(iii)-1. 5. State that the list of such geographies will be reviewed and updated annually and propose a one-year lag period during which a bank may continue to receive consideration for activities in a distressed or underserved middle-income nonmetropolitan area that has been removed from the list. See __ .12(g)(4)(iii)-2. 6. Clarify that revitalization and stabilization activities in middle-income nonmetropolitan distressed geographies are evaluated differently than those in middle-income nonmetropolitan underserved geographies. See __ .12(g)(4)(iii)-3. 7. Explain when housing for middle- and upper-income persons in distressed or underserved nonmetropolitan middle-income geographies or designated disaster areas may be considered as a community development activity. See __ .12(g)(4)-2. The three new questions and answers concerning the community development test applicable to intermediate small banks: 1. Discuss what examiners will consider when they review the responsiveness of an intermediate small bank's community development activities to the community development needs of the area. See __ .26(c)(4)-1. 2. Address how the community development test for intermediate small banks will be applied flexibly so that banks can address community development needs in their assessment areas in the most responsive manner. See __ .26(c)-1. 3. Explain what examiners will consider when evaluating the provision of community development services by an intermediate small bank in the community development test. See __ .26(c)(3)- 1. The remaining three new questions and answers address consideration of prior-period qualified investments for any size bank, see __ .12(t) - 1; treatment of small banks' affiliate activities, see __ .26 - 1; and adjustments in the small bank asset threshold, see __ .12(u)(2) - 1. In addition, the proposed guidance includes three revisions to two existing questions and answers. These two questions and answers provide additional clarification and examples of community development services and qualified investments. In particular, a new provision states that a community development service may include providing international remittances services that increase access to financial services by low- and moderate-income persons. See __ .12(j) - 3 and __. 12(s) - 4. For more information, contact Karen Tucker, national bank examiner, Compliance Policy Division, at (202) 874-4428, or Margaret Hesse, special counsel, Community and Consumer Law Division, at (202) 874-5750. ____________________________ Ann F. Jaedicke Deputy Comptroller for Compliance Policy Attachment - 70 FR 68450 [http://www.occ.treas.gov/fr/fedregister/70fr68450.pdf] _______________________________ 1 65 FR 36620 dated July 12, 2001. 2 70 FR 44256 dated August 2, 2005.