OCC 2006-16
OCC Bulletin

    Subject:  Community Reinvestment Act
Description:  Interagency Questions and Answers
       Date:  April 6, 2006

TO:  Chief Executive Officers and Compliance Officers of All
     National Banks, Department and Division Heads, and All 
     Examining Personnel

On March 10, 2006, the Office of the Comptroller of the Currency
(OCC), Board of Governors of the Federal Reserve System (Board),
and the Federal Deposit Insurance Corporation (FDIC)
(collectively, the agencies) published in the Federal Register
"Interagency Questions and Answers Regarding Community
Reinvestment" (71 FR 12424).  The Questions and Answers primarily
address topics related to changes made in the agencies' August
2005 revisions to their CRA regulations, including raising the
"small bank" threshold to $1 billion; creating a category of
"intermediate small banks" for CRA purposes; and expanding the
definition of "community development" to encourage greater
investment in underserved or distressed rural areas and in
designated disaster areas.  The new guidance augments the
Interagency Questions and Answers Regarding Community
Reinvestment that were published in the Federal Register on July
12, 2001 (66 FR 36620).  The Interagency Questions and Answers
are the agencies' primary vehicle for disseminating guidance
interpreting the CRA regulations.

Among the Questions and Answers that the agencies have adopted is
guidance that:

    Explains that the agencies, generally, will consider an
  activity to revitalize or stabilize a designated disaster area if
  it helps to attract new, or retain existing, businesses or
  residents and is related to disaster recovery.  The guidance
  provides examples of revitalization and stabilization activities
  in designated disaster areas.
  
    States that examiners will consider bank activities related
  to disaster recovery that revitalize or stabilize a designated
  disaster area for 36 months following the date of disaster
  designation or longer, based on a demonstrable community need.
  The agencies plan to extend the 36-month time period as it
  applies to Gulf Coast areas affected by hurricanes Katrina and
  Rita, because of the demonstrated community need for long-term
  investment by banks to assist in recovery-related efforts there.

    Explains when an activity that provides housing for middle-
  or upper-income persons may qualify as an activity that
  revitalizes or stabilizes a designated distressed or underserved
  rural area or a designated disaster area.

    States that an activity revitalizes or stabilizes a
  designated distressed rural area if it helps to attract new, or
  retain existing, businesses or residents, and provides examples
  of such activities.

    States that activities that revitalize or stabilize a
  designated underserved rural area include those that help meet
  essential community needs, including needs of low- or moderate-
  income persons, and provides examples of such activities.

    Adopts a one-year lag period, following the date that
  geographies have been removed from the list of designated
  distressed or underserved rural areas, during which community
  development activities in those areas will continue to receive
  CRA consideration.

The agencies also adopted guidance that:

    Clarifies that examiners will consider investments that were
  made prior to the current examination, but that are still
  outstanding.

    States that, when evaluating a small or intermediate small
  bank's performance, examiners will consider, at the bank's
  request, retail and community development loans originated or
  purchased by affiliates, qualified investments made by
  affiliates, or community development services provided by
  affiliates.

    Explains that, generally, the presence of branches located
  in low- and moderate-income geographies will help to demonstrate
  the availability of banking services to low- and moderate-income
  persons in an evaluation of an intermediate small bank's
  community development services.
  
    Added three more examples of community development services
  and qualified investments.

Interested parties are encouraged to review the attached
interagency guidance.  For more information, please contact Karen
Tucker, National Bank Examiner, Compliance Policy Division, (202)
874-4428; or Margaret Hesse, Special Counsel, Community and
Consumer Law Division, (202) 874-5750.

____________________________________
Ann F. Jaedicke
Deputy Comptroller for Compliance Policy

Attachment - 71 FR 12424
          [http://www.occ.treas.gov/fr/fedregister/71fr12424.pdf]