OCC 2006-16 OCC Bulletin Subject: Community Reinvestment Act Description: Interagency Questions and Answers Date: April 6, 2006 TO: Chief Executive Officers and Compliance Officers of All National Banks, Department and Division Heads, and All Examining Personnel On March 10, 2006, the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) published in the Federal Register "Interagency Questions and Answers Regarding Community Reinvestment" (71 FR 12424). The Questions and Answers primarily address topics related to changes made in the agencies' August 2005 revisions to their CRA regulations, including raising the "small bank" threshold to $1 billion; creating a category of "intermediate small banks" for CRA purposes; and expanding the definition of "community development" to encourage greater investment in underserved or distressed rural areas and in designated disaster areas. The new guidance augments the Interagency Questions and Answers Regarding Community Reinvestment that were published in the Federal Register on July 12, 2001 (66 FR 36620). The Interagency Questions and Answers are the agencies' primary vehicle for disseminating guidance interpreting the CRA regulations. Among the Questions and Answers that the agencies have adopted is guidance that: Explains that the agencies, generally, will consider an activity to revitalize or stabilize a designated disaster area if it helps to attract new, or retain existing, businesses or residents and is related to disaster recovery. The guidance provides examples of revitalization and stabilization activities in designated disaster areas. States that examiners will consider bank activities related to disaster recovery that revitalize or stabilize a designated disaster area for 36 months following the date of disaster designation or longer, based on a demonstrable community need. The agencies plan to extend the 36-month time period as it applies to Gulf Coast areas affected by hurricanes Katrina and Rita, because of the demonstrated community need for long-term investment by banks to assist in recovery-related efforts there. Explains when an activity that provides housing for middle- or upper-income persons may qualify as an activity that revitalizes or stabilizes a designated distressed or underserved rural area or a designated disaster area. States that an activity revitalizes or stabilizes a designated distressed rural area if it helps to attract new, or retain existing, businesses or residents, and provides examples of such activities. States that activities that revitalize or stabilize a designated underserved rural area include those that help meet essential community needs, including needs of low- or moderate- income persons, and provides examples of such activities. Adopts a one-year lag period, following the date that geographies have been removed from the list of designated distressed or underserved rural areas, during which community development activities in those areas will continue to receive CRA consideration. The agencies also adopted guidance that: Clarifies that examiners will consider investments that were made prior to the current examination, but that are still outstanding. States that, when evaluating a small or intermediate small bank's performance, examiners will consider, at the bank's request, retail and community development loans originated or purchased by affiliates, qualified investments made by affiliates, or community development services provided by affiliates. Explains that, generally, the presence of branches located in low- and moderate-income geographies will help to demonstrate the availability of banking services to low- and moderate-income persons in an evaluation of an intermediate small bank's community development services. Added three more examples of community development services and qualified investments. Interested parties are encouraged to review the attached interagency guidance. For more information, please contact Karen Tucker, National Bank Examiner, Compliance Policy Division, (202) 874-4428; or Margaret Hesse, Special Counsel, Community and Consumer Law Division, (202) 874-5750. ____________________________________ Ann F. Jaedicke Deputy Comptroller for Compliance Policy Attachment - 71 FR 12424 [http://www.occ.treas.gov/fr/fedregister/71fr12424.pdf]