Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, delivered the following opening statement at a full Committee hearing entitled, “The Community Reinvestment Act: Is the OCC Undermining the Law’s Purpose and Intent?”
As Prepared for Delivery
Today this Committee convenes for a hearing to conduct oversight of the Office of the Comptroller of the Currency (OCC), including to review its approach to overhauling the Community Reinvestment Act (CRA).
Comptroller Otting, welcome back. I am pleased that this Committee will finally be able to hear from you after you missed our hearing in December.
The Community Reinvestment Act is an important law that was enacted to combat redlining and to ensure that banks make responsible investments in the communities where they are chartered.
Unfortunately, the OCC has put forth a rule that runs contrary to the purpose of the CRA and would lead to widespread bank disinvestment from low- and moderate-communities throughout the country. Comptroller Otting’s proposal, which closely follows the recommendations made by his former bank colleague and now Secretary of the Treasury, Steven Mnuchin, would allow banks to skate by and do the bare minimum for a passing grade. Banks could claim CRA credit for investing in sports stadiums and bridges to nowhere. It would also allow banks to earn failing grades in nearly half of their CRA assessment areas and still pass their overall CRA exam.
Any serious update to the CRA regulations would set out to strengthen the law. Comptroller Otting’s proposal instead does the opposite. Under Comptroller Otting, the Community Reinvestment Act would become the Community Disinvestment Act.
Such a radical change to the CRA demands a heightened level of public scrutiny. But Comptroller Otting appears determined to push this through as quickly as possible. The Comptroller is only allowing for a 60-day comment period, which will expire in early March. This is simply unacceptable. Before the proposal was released, all 34 Democrats on this Committee wrote to Comptroller Otting and the other bank regulators calling on them, at a minimum, to provide a public comment period of at least 120 days for any proposal reforming the CRA. Since that time, community banks and others have also asked for a 120-day comment period. In the past, the OCC has provided 120 days if not longer for the public to comment on bank capital rules, and there’s no reason why this important CRA rulemaking should be treated differently.
Of course, no one should be surprised. Prior to assuming their respective government roles, Comptroller Otting and Secretary Mnuchin served as CEO and Chairman of the Board, respectively, at OneWest Bank, which the federal government alleges engaged in redlining. It has also been widely reported that when Mr. Otting was at the helm, OneWest attempted to game the public comment process when the bank was applying to merge with CIT Bank. A 2018 media investigation uncovered hundreds of fake comment letters on the merger, with text originating from OneWest.
There are other issues I am also concerned about, including the OCC’s efforts to deregulate megabanks and its actions to greenlight rent-a-bank schemes that allow lenders to skirt state usury caps.
I look forward to hearing Comptroller Otting’s testimony today.
Chairwoman Waters invited the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the National Credit Union Association (NCUA) to a full Committee hearing in December to conduct oversight of prudential regulators. Comptroller Otting was the only regulator invited who did not attend.
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