Today, H.J. Res 90, a Congressional Review Act resolution of disapproval to nullify the OCC’s harmful Community Reinvestment Act rule introduced by Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, and Congressman Gregory Meeks (D-NY), Chair of the Subcommittee on Consumer Protection and Financial Institutions, passed the U.S. House of Representatives. See below for Chairwoman Waters’ floor statement on the resolution:
Madam Speaker, I rise in support of House Joint Resolution 90, a Congressional Review Act resolution of disapproval to nullify the Office of the Comptroller of the Currency’s rule undermining the Community Reinvestment Act. I introduced this resolution with our Consumer Protection and Financial Institutions Subcommittee Chair, Representative Meeks, and I am proud we are joined by 70 other Members who have cosponsored the resolution.
The Community Reinvestment Act is a civil rights law enacted in 1977 to prevent the discriminatory practice of redlining, in which banks discriminate against prospective customers in nearby neighborhoods, often based on their racial or ethnic background. The law requires banks to invest and lend responsibly in low- and moderate-income (LMI) communities where they are chartered. Unfortunately, implementation of the Community Reinvestment Act has not been robust. Today, 98 percent of banks routinely pass their Community Reinvestment Act exams. However, research has shown that more than 60 metro areas across the country are experiencing modern-day redlining today. These findings clearly demonstrate the need to strengthen the implementation of the law. Unfortunately, the OCC’s rule would do the opposite.
Despite the warnings of a wide range of stakeholders, former Comptroller Joseph Otting rushed to finalize this rule in his final days on the job, without the support of Federal Reserve or the Federal Deposit Insurance Corporation, the other banking regulators with responsibility for enforcing the law. Mr. Otting appears to have been determined to undermine the Community Reinvestment Act ever since the law complicated his efforts to quickly obtain regulatory approval for OneWest Bank, a bank he ran with Treasury Secretary Mnuchin, to merge with another bank in 2015.
I am deeply concerned that the OCC’s final rule will harm low-income and minority communities that are disproportionately suffering during this crisis, effectively turning the Community Reinvestment Act into the Community Disinvestment Act. If this resolution is not adopted, we will have different rules for different banks, leading to regulatory arbitrage and a race to the bottom of weaker standards that will only hurt the people the law was intended to help.
Notably, the OCC rule was adopted with insufficient and incomplete data, and it incentivizes large deals at the expense of smaller and more continuous financial transactions that truly benefit LMI communities. For example, the OCC final rule allows CRA credit to be given for activities in LMI qualified Opportunity Zones, but the rule does not ensure that these activities promote community development that includes affordable housing or small business economic development. This could lead to the unacceptable result of banks receiving CRA funding for building luxury housing in Opportunity Zones, providing no direct benefit to LMI communities. Additionally, the OCC concedes it does not have all the data it needs to properly implement its new CRA framework, with the rule stating that the OCC will need to issue yet another notice of proposed rulemaking in the future to help set specific benchmarks, thresholds, and minimums. It doesn’t speak highly of a rule when the author says it is half baked.
A wide range of stakeholders have criticized the OCC’s efforts. For example, a group of civil rights and consumer groups issued a statement, noting, “The new [OCC] rules stick with an overly simplistic metrics system that creates a loophole for banks to exploit, allowing them to get a passing CRA rating by making investments in communities where they can reap the largest rewards, while leaving too many credit needs unmet for underserved consumers and neighborhoods.”
During these difficult times, communities across the country have taken to the streets to demand justice, and to tell their elected officials that they can no longer ignore the needs of communities of color. In a letter supporting this resolution from various organizations led by The Leadership Conference on Civil and Human Rights and National Community Reinvestment Coalition, they wrote, “In the weeks since the OCC finalized its rule, our nation has been facing a long-overdue reckoning with our troubled legacy of racial and ethnic discrimination…. Now is certainly not the time to weaken the most important civil rights laws we have at our disposal to correct those disparities.”
Congress must block any effort by the Trump Administration to weaken our civil rights laws and send a strong message to federal regulators that they should be doing all they can during this pandemic to help, not hurt, low- and moderate-income communities, and especially communities of color. By passing this resolution, Congress will block the OCC’s harmful rule so that once the pandemic passes, banking regulators can renew efforts to collaborate, modernize, and strengthen the Community Reinvestment Act with a new, joint rulemaking that truly benefits the communities the law was intended to help. Therefore, I urge my colleagues in the House to vote yes on H.J. Res. 90. I reserve the balance of my time.