On March 19, Office of Thrift Supervision (OTS) director John Reich announced that the Community Reinvestment Act (CRA) obligations applicable to federal thrifts were revised by the OTS in an effort to “reestablish uniformity between its rules and those of the other federal banking agencies.”
According to the OTS, the revisions align the agency’s rules with those of the other federal banking agencies by:
• eliminating the option of alternative weights for lending, investment, and service under the large, retail savings association test;
• defining institutions with assets between $250 million and $1 billion as “intermediate small savings associations” subject to a new community development test;
• indexing the asset threshold for “small” and “intermediate small” savings associations annually based on changes to the Consumer Price Index; and;
• clarifying the adverse impact on a savings association’s CRA rating where the OTS finds evidence of discrimination or other illegal credit practices.
The final rule is effective July 1, with rule changes applicable to examinations beginning in the third quarter of 2007.
Director Reich noted, however, that “for institutions that have adjusted their CRA programs in reliance on the availability of the alternative weight option under the large retail savings association test – or on the availability of the streamlined small institution test for institutions with up to $1 billion in assets, OTS examiners will take into consideration – as part of the performance context – that the rules have not been consistent during the evaluation period...The preamble provides specific discussion of how we will use performance context for institutions that adjusted their CRA program in recognition of the previous rule adopted by OTS.”