Skip to content

House rejects OCC change to bank discrimination rule

Passage in Senate is unlikely

Joseph Otting, comptroller of the Currency, made the redlining rule change a top priority. He announced his resignation a day after the rule's finalization.
Joseph Otting, comptroller of the Currency, made the redlining rule change a top priority. He announced his resignation a day after the rule's finalization. (Tom Williams/CQ Roll Call)

The House passed a resolution Monday that would block a change in community reinvestment rules for banks as the administration said the president would veto the measure.

The House voted 230-179 to pass the joint resolution under a law known as the Congressional Review Act. The measure would scrap a recent rule change to a 1977 law that requires banks to invest in areas where they have offices. The measure faces long odds in the GOP-controlled Senate, and the White House said President Donald Trump would veto what is a rebuke of a Trump-chosen regulator’s signature proposal.

The Office of the Comptroller of the Currency finalized the changes to the 1977 law in May over the objections of community groups. The law requires banks to make investments in the neighborhoods they are located in, and the rule changes are supposed to make it easier for banks to prove they are doing so by using simplified, quantitative tests over more qualitative assessments.

Critics say the changes will allow banks to get credit for making profitable investments that do little to help low-income communities and residents. Supporters counter that the current rules can spur gentrification and displacement by encouraging banks to finance mortgages to wealthier homebuyers in low-income communities.

Banks have long complained about the subjective nature of requirements, saying the lack of uniform standards makes compliance harder. Over the last three years, 97 percent of banks have passed evaluations of their investment practices in low-income areas. Still, industry groups have offered only tepid support for the OCC’s changes.

The two other bank regulators — the Federal Reserve and the Federal Deposit Insurance Corporation — did not sign onto the OCC’s rule changes. While that leaves out most U.S. banks, the bulk of bank assets, 69 percent, are regulated by the OCC.

The rule change was a top priority for Joseph Otting, who announced his resignation as Comptroller of the Currency a day after its finalization. Otting has been accused of rushing the rule through the regulatory process, and he ignored calls to lengthen the comment and feedback period to account for the coronavirus pandemic.

Congress has 60 legislative days to reverse a federal agency’s rulemaking under the Congressional Review Act. It was only used once before 2017, but Trump has since signed 16 resolutions repealing rules enacted in the waning days of the Obama administration.

Had Otting given in to demands from community groups and some banks to lengthen the public comment period, the rule might not have been finalized with enough time to ensure that the 60-day window would be closed before Democrats have a chance to take control of the Senate and the White House.

Even if the joint resolution dies in the Senate as expected, the rule change won’t be completely in the clear: The National Community Reinvestment Coalition is suing to block it, saying the OCC didn’t provide enough consideration to public feedback. 

Recent Stories

Capitol Ink | Twas the night before Congress

Democrats divided over Biden’s move on digital trade

These LGBTQ+ families have a message for the Midwest: ‘We Live Here’

Topline appropriations talks at a standstill

Santos, expelled from the House, keeps on posting

House Judiciary panel to consider Section 702 reauthorization bill