Comptroller of the Currency Joseph Otting is an unusually pro-bank regulator who once ran a California lender and understands the business. But his proposed overhaul of landmark anti-redlining rules is causing the industry a lot of angst, Politico reported. The reform of the 1977 Community Reinvestment Act, jointly put forward by Otting’s agency and the FDIC, aims to address a slew of long-standing complaints from banks about the law, which encourages them to lend to lower-income borrowers in the neighborhoods where they do business. But industry representatives warn that the proposal would hike their costs and in some cases actually dim their incentive to lend to people who don’t already have access to credit. Especially concerning to bankers: They don’t have time to crunch the numbers on what the new regime would mean for their bottom line since Otting is moving ahead with what amounts to sprint speed for a rule change. According to interviews with a dozen bank representatives, the companies are supportive of Otting’s attempt to improve and modernize CRA, an effort that is his top priority. But they say the proposal could cost billions for financial institutions that will now have to do much more intensive recordkeeping of certain data, such as where their depositors live.
