FDIC Chairman Jelena McWilliams said the aim of the proposal is to increase lending to the affected communities. Her view was endorsed by Treasury Secretary Steven Mnuchin, who issued a statement lauding the FDIC and OCC “for developing much needed regulations to modernize and improve the effectiveness of the CRA.”
Martin Gruenberg, the only FDIC board member to vote against the overhaul, called it “a deeply misconceived proposal that would fundamentally undermine and weaken” CRA regulations. Gruenberg, who preceded McWilliams as chairman, said banks could game their results by ignoring some of their assessment areas and still get a good CRA score.
Under the proposal, which will be opened for a 60-day public comment period, banks would be given some time to transition to the new rules, and the smallest lenders would be able to opt out.
Also Thursday, the FDIC board approved a proposal to make sweeping changes to the oversight of brokered deposits, a topic especially relevant as fintech firms handle more and more of people’s money. The FDIC’s McWilliams said this week that the current system has left an inconsistent and uneven treatment of third-party deposits in U.S. banking, and that regulators’ sluggish response could get in the way of innovation.
This article was provided by Bloomberg News.