Licensing and Community Reinvestment Act: Consideration of Politicized or Unlawful Debanking

Summary

The Office of the Comptroller of the Currency (OCC) is clarifying how it considers politicized or unlawful debanking in licensing filings by banks¹ and banks' records of performance under the Community Reinvestment Act (CRA)² consistent with Executive Order 14331, Guaranteeing Fair Banking for All Americans.

Highlights

This bulletin clarifies how the OCC considers politicized or unlawful debanking in licensing applications filed by banks and banks' records of performance under the CRA. The OCC reviews licensing filings for evaluative factors prescribed by statute and regulation. In addition, the CRA requires the OCC to assess insured banks' records of meeting the credit needs of their entire communities, including low- and moderate-income neighborhoods, consistent with the banks' safe and sound operations.³

Background

Executive Order 14331 defines "politicized or unlawful debanking" as an act by a financial service provider "to directly or indirectly adversely restrict access to, or adversely modify the conditions of, accounts, loans, or other banking products or financial services of any customer or potential customer on the basis of the customer's or potential customer's political or religious beliefs, or on the basis of the customer's or potential customer's lawful business activities that the financial service provider disagrees with or disfavors for political reasons."

The OCC reviews licensing filings by banks seeking to engage in various corporate activities or by entities seeking a federal charter or license. The OCC reviews these filings for specific evaluative factors under applicable statutes and regulations. Politicized or unlawful debanking by banks implicates certain evaluative factors for such licensing filings, which range from the convenience and needs of the community to be served, fair access to financial services, fair treatment of customers, and the transaction's impact on depositors, other creditors, and customers. Relevant filings include new charters, conversions, fiduciary powers, branching, business combinations, voluntary liquidation, changes in control, changes in directors and senior executive officers, and substantial asset changes.⁴ As part of its holistic review of licensing filings, the OCC considers, on a case by case basis, a bank's record of and policies and procedures designed to avoid engaging in politicized or unlawful debanking consistent with the applicable evaluative factors.

Similarly, in assessing an insured bank's performance under the CRA, the OCC considers the bank's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the bank's safe and sound operation. As part of this examination, whether a bank has engaged in politicized or unlawful debanking is a factor the OCC may consider, on a case by case basis, in determining the bank's CRA rating.

Consistent with the OCC's existing practice of tailoring requirements and supervisory expectations, the OCC will tailor its consideration of politicized or unlawful debanking in licensing applications filed by a bank and in a bank's record of performance under the CRA based on the size, complexity, and overall risk profile of the relevant bank.

The OCC, in the normal course of updating the booklets of the Comptroller's Licensing Manual, the "Community Reinvestment Act Examination Procedures" booklet of the Comptroller's Handbook, and relevant regulations, will clarify these principles as relevant.

Further Information

Please contact Yoo Jin Na, Director for Licensing Activities, at (202) 649-6260.

Jonathan V. Gould
Comptroller of the Currency