Banks that have long lamented rules requiring them to do some of their business in less wealthy areas would get a break under a proposal released on Dec. 12 by two regulatory agencies. But the industry’s most prominent regulator, the Federal Reserve, isn’t on board, the New York Times reported. The central bank did not join in a proposal from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation that would give the Community Reinvestment Act its first major overhaul in a quarter-century. Joseph Otting, the comptroller of the currency, who spearheaded the effort, said that regulators had worked for 18 months on a plan, “but not all three agencies could move forward together at this time.” The Federal Reserve chair, Jerome Powell, had signaled his disapproval on Wednesday, saying that the central bank had worked hard to get on the same page. “My hope is that we can still do that. I don’t know whether that will be possible or not,” he said. “If we can’t, I’m not sure what the path forward would be.” Should the changes be enacted without the Fed’s support, it would create two sets of rules: One for those overseen by the central bank and one for those overseen by the other two agencies. Banks have long called the Community Reinvestment Act’s requirements burdensome and impractical, but shirking them is not an option. Banks that do not meet the requirements face heavy regulatory scrutiny and can have difficulty getting approval for mergers or expansions.
