Notice2022-16345
OCC Policy Statement on Minority Depository Institutions
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Published
August 1, 2022
Issuing agencies
Treasury DepartmentComptroller of the Currency
Abstract
The Office of the Comptroller of the Currency (OCC) is amending its 2013 Policy Statement on Minority National Banks and Federal Savings Associations to update and streamline the description of its policies, procedures, and programs on minority depository institutions.
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[Federal Register Volume 87, Number 146 (Monday, August 1, 2022)]
[Notices]
[Pages 47028-47034]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16345]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket ID OCC-2022-0009]
OCC Policy Statement on Minority Depository Institutions
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Policy statement.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its 2013 Policy Statement on Minority National Banks and
Federal Savings Associations to update and streamline the description
of its policies, procedures, and programs on minority depository
institutions.
DATES: The issuance date of this policy statement is July 26, 2022.
FOR FURTHER INFORMATION CONTACT: Charlotte M. Bahin, Senior Advisor for
Thrift Supervision, (202) 649-6281; or Karen E. McSweeney, Special
Counsel, Emily Boyes, Counsel, (202) 649-5490; or Karen Bellesi,
Director for Community Development, (202) 649-6420, Office of the
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
For persons who are deaf, hard of hearing, or have a speech disability,
please dial 7-1-1 to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Office of the Comptroller of the Currency (OCC or agency)
recognizes the vital role of minority depository institutions (MDIs) in
supporting the economic viability of the communities they serve,
including but not limited to the economic viability of the minority
individuals,\1\ women, or other socially and economically disadvantaged
individuals in those communities. By providing access to credit and
other financial services to those who otherwise might not have
sufficient access, MDIs are essential to the well-being of
disadvantaged and underserved communities across America.\2\
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\1\ For purposes of this preamble, the word ``individual'' means
a natural person, corporation, partnership, or entity.
\2\ Although MDIs account for a small share of banks and bank
assets, a relatively large share of their branches and branch
deposits are in socially vulnerable counties. See, e.g., Minority
Depository Institutions Have Vital Role Serving Vulnerable
Communities, Federal Reserve Bank of Dallas (Feb. 1, 2022),
available at <a href="https://www.dallasfed.org/research/economics/2022/0201">https://www.dallasfed.org/research/economics/2022/0201</a>.
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Over the past decade, the OCC has demonstrated significant support
for national banks and Federal savings associations (collectively,
banks) that the agency has designated as MDIs.\3\ For example, since
2011, the agency has administered the Minority Depository Institutions
Advisory Committee (MDIAC), which is comprised of officers and
directors of OCC-supervised MDIs and other banks committed to
supporting MDIs.\4\ The MDIAC provides the OCC with insight on the
unique challenges MDIs face and advises the agency on ways to help
ensure their continued health and sustainability.
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\3\ ``Designation'' is the process by which the OCC classifies a
bank as an MDI and is discussed in greater detail below.
\4\ The MDIAC is a Federal advisory committee chartered under
the Federal Advisory Committee Act. See 5 U.S.C. Appendix. The MDIAC
replaced a similar advisory group established by the former Office
of Thrift Supervision (OTS) prior to Congress' transfer of OTS'
responsibilities for oversight of Federal savings associations to
the OCC on July 21, 2011. See Title III, Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank Act), Public Law 111-
203, 124 Stat. 1376, 1520 (2010).
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In 2013, the OCC issued a policy statement on MDIs (2013 Policy
Statement), reaffirming its commitment to their creation and
preservation.\5\ The
[[Page 47029]]
2013 Policy Statement sets out the agency's MDI designation process,
explains how the agency supports MDIs, and provides other useful
information to stakeholders and interested parties.
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\5\ Policy Statement on Minority National Banks and Federal
Savings Associations (June 7, 2013), available at <a href="https://www.occ.treas.gov/static/licensing/form-minority-owned-policy.pdf">https://www.occ.treas.gov/static/licensing/form-minority-owned-policy.pdf</a>.
Previously, in 2001, the agency issued the Policy Statement on
Minority-Owned National Banks, which (1) included information for
persons interested in establishing an OCC-regulated MDI; (2)
provided guidance on investing in MDIs; and (3) discussed available
OCC examination support for MDIs. The 2001 policy statement defined
``minority-owned bank'' to include minority-owned or controlled
national banks, as well as national banks owned, controlled, and
operated by women, consistent with the U.S. Department of the
Treasury's Bank Deposit Program. See Exhibit E to A Guide to Tribal
Ownership of a National Bank, available at <a href="https://www.occ.gov/publications-and-resources/publications/comptrollers-licensing-manual/files/a-guide-to-tribal-ownership-of-a-national-bank.html">https://www.occ.gov/publications-and-resources/publications/comptrollers-licensing-manual/files/a-guide-to-tribal-ownership-of-a-national-bank.html</a>.
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In 2020, the OCC formed Project REACh,\6\ which brings together
leaders from banking, business, technology, and civil rights
organizations to reduce specific barriers that prevent full, equal, and
fair participation in the nation's economy.\7\ One focus of Project
REACh is to strengthen MDIs through a dedicated workstream that seeks
to identify and address operational impediments to MDI creation and
growth. Among other things, Project REACh provides MDIs with targeted
technical assistance and help developing executive exchange programs;
improving access to cost effective and shared services; and
establishing revenue-generating partnerships and collaborations. Also
in 2020, Congress created the Emergency Capital Investment Program
(ECIP), which directed nine billion dollars to MDIs and certified
Community Development Financial Institutions to, among other things,
provide financial assistance for businesses and consumers in
disadvantaged and underserved communities disproportionately impacted
by the economic effects of the COVID-19 pandemic.\8\
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\6\ Project REACh stands for the Roundtable for Economic Access
and Change.
\7\ Information about Project REACh is available at <a href="https://www.occ.gov/topics/consumers-and-communities/minority-outreach/project-reach.html">https://www.occ.gov/topics/consumers-and-communities/minority-outreach/project-reach.html</a>.
\8\ See Public Law 116-260, 134 Stat. 1182, 2079 (2020),
codified at 12 U.S.C. 4703a.
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Following the formation of Project REACh and establishment of ECIP,
the OCC witnessed increased interest from banks and other stakeholders
in working with MDIs and the MDI designation process. In response, the
agency undertook a review of the 2013 Policy Statement to determine
whether clarifications or other changes were necessary. This revised
policy statement is a result of that review.
II. Background
Congress has long recognized the important role of MDIs in the U.S.
banking system. For example, over 30 years ago, Congress enacted
section 308 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA), which established goals to preserve,
promote, encourage, and provide for MDIs.\9\ Specifically, section 308
directs the Secretary of the U.S. Department of the Treasury (Treasury)
to consult with the Comptroller of the Currency, Chairman of the Board
of Governors of the Federal Reserve System (Board), Chairperson of the
Board of Directors of the Federal Deposit Insurance Corporation (FDIC),
and Chairman of the National Credit Union Administration (NCUA) on the
methods for best (1) preserving the present number of MDIs; (2)
preserving MDIs' minority character in cases of merger or acquisition;
(3) providing technical assistance to help MDIs remain healthy; (4)
promoting and encouraging the creation of new MDIs; and (5) providing
MDIs with training, technical assistance, and educational programs.\10\
Section 308 also requires each referenced agency to submit an annual
report to Congress describing its actions to carry out these goals.\11\
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\9\ 12 U.S.C. 1463 (note).
\10\ Prior to the Dodd-Frank Act, section 308 of FIRREA applied
only to the FDIC and OTS. See Public Law 101-73, 103 Stat. 183, 353
(Aug. 9, 1989). Section 367 of the Dodd-Frank Act amended the scope
of section 308 to include the OCC, Board, and NCUA and to remove the
OTS. See Dodd-Frank Act, 124 Stat. at 1556. It should be noted,
however, that the OCC recognized MDIs long before its inclusion in
the scope of section 308.
\11\ Congress added this requirement to FIRREA in section
367(4)(B) of the Dodd-Frank Act. See 124 Stat. at 1556. The OCC's
2020 Report to Congress on Preserving and Promoting Minority
Depository Institutions is available at <a href="https://www.occ.gov/publications-and-resources/publications/banker-education/files/2020-report-to-congress-minority-depository-instit.html">https://www.occ.gov/publications-and-resources/publications/banker-education/files/2020-report-to-congress-minority-depository-instit.html</a>.
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For purposes of OCC-regulated entities, section 308(b)(1) of FIRREA
defines ``minority depository institution'' as (1) a national bank or
Federal stock \12\ savings association that is at least 51 percent
owned (the ownership threshold) by one or more socially and
economically disadvantaged individuals or (2) a Federal mutual savings
association in which the majority of its board of directors, its
account holders, and the community it serves is predominantly
minority.\13\ Section 308(b)(2) of FIRREA defines ``minority'' as ``any
black American, Native American, Hispanic American, or Asian
American.'' The statute does not define ``socially and economically
disadvantaged individuals.''
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\12\ Section 308(b) of FIRREA uses the terms ``privately owned''
MDI and ``publicly owned'' MDI and distinguishes these MDIs from
MDIs that are mutual savings associations. In this preamble and the
revised policy statement, the OCC uses the term ``stock'' to capture
both privately and publicly owned MDIs and to distinguish them from
MDIs that are mutual savings associations. A Federal stock savings
association may be publicly or privately owned.
\13\ Other federal statutes include other definitions of MDI.
See, e.g., 12 U.S.C. 2907. As a matter of policy, Federal agencies
also recognize MDIs other than those specifically identified in
section 308 of FIRREA. This includes OCC recognition of (1) Federal
mutual savings associations where women comprise a majority of the
Board of Directors and hold a significant percentage of senior
management positions; and (2) previously designated MDIs, both as
described in the OCC's current policy statement. In addition, the
Board and the FDIC consider a bank to be an MDI if a majority of the
bank's board of directors consists of minority individuals and the
community that the bank serves is predominantly minority.
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As noted previously, the OCC's 2013 Policy Statement sets forth the
agency's policy with respect to MDIs. It (1) incorporates the
definitions of MDI from section 308 of FIRREA; (2) describes other
Federal mutual savings associations that the OCC recognizes as MDIs as
a matter of policy; and (3) recognizes the agency's discretion to treat
previously designated national banks that no longer meet the ownership
threshold as MDIs if they primarily serve the credit and other economic
needs of a predominantly minority community. The 2013 Policy Statement
defines ``minority'' \14\ in the same way it is defined in section 308
of FIRREA and, also like section 308, does not define ``socially and
economically disadvantaged individuals.'' The 2013 Policy Statement
also (1) includes information about forming an OCC-supervised MDI; (2)
describes the OCC's examination support for MDIs; (3) discusses banks'
investments in MDIs pursuant to their respective investment
authorities; (4) sets forth the agency's goals in the event of
resolution of an MDI; (5) explains the role of the Community
Reinvestment Act (CRA) in supporting MDIs; (6) describes the role and
responsibilities of the MDIAC and other outreach efforts; (7) explains
the information, education, and outreach resources available to MDIs
from the OCC; and (8) explains that the OCC submits an annual report to
Congress.
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\14\ The 2013 Policy Statement defines ``minority'' in
essentially the same way that section 308 of FIRREA defines the
term, except that FIRREA uses the term ``black American'' and the
2013 Policy Statement uses the term ``African American.'' For the
purposes of this preamble and the revised policy statement, the OCC
does not interpret this difference to be materially significant.
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[[Page 47030]]
III. Revised Policy Statement
The OCC is issuing this revised policy statement, which replaces
its 2013 Policy Statement, to update the description of the agency's
MDI policies, procedures, and programs, including by removing obsolete
references and streamlining the document.
Section 1. Introduction. The 2013 Policy Statement begins by
recognizing the important role of MDIs in the communities they serve
and affirming the agency's commitment to MDIs. In a section entitled
``Statutory Framework,'' the OCC describes the goals of section 308 of
FIRREA and the agency's commitment to these goals. Similarly, the
revised policy statement begins by recognizing the important role of
MDIs in the communities they serve and affirming both the OCC's support
for MDIs and the goals of section 308 of FIRREA.
Section 2. Meaning of MDI. In the ``Definition of MDIs'' section,
the 2013 Policy Statement defines a ``minority depository institution''
as a national bank or Federal stock savings association that (1) is not
a U.S. subsidiary of a foreign-owned bank and (2) is at least 51
percent owned by minorities, women, or socially and economically
disadvantaged individuals. In this same section, the 2013 Policy
Statement also states that when evaluating a Federal mutual savings
association, the OCC may consider whether (1) the majority of its Board
of Directors is minority and the communities it serves are
predominantly minority or (2) women comprise a majority of its Board of
Directors and hold a significant percentage of its senior management
positions. The 2013 Policy Statement also states that the OCC, at its
discretion, may continue to treat a national bank or Federal savings
association previously designated as an MDI as covered by the policy
statement even if the bank no longer meets the ownership threshold,
provided it primarily serves the credit and other economic needs of the
community in which it is chartered, and the community is predominantly
minority.
Structural changes. The OCC has made a number of changes to
streamline and clarify this section. First, the revised policy
statement divides the discussion of types of MDIs into subsection A
(which discusses national banks and Federal stock savings associations
that are MDIs) and subsection B (which discusses Federal mutual savings
associations that are MDIs).\15\ Second, the revised policy statement
moves the discussion about previously designated MDIs into section 3
(entitled ``Formation, Designation, and On-Going Review''), where all
designation issues are addressed.
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\15\ The revised policy statement also moves the statement that
an MDI may not be a U.S. subsidiary of a foreign-owned bank to a
footnote. Under both the 2013 Policy Statement and the revised
policy statement, this requirement applies to all MDIs in all
situations.
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Minority individuals. As noted above, the 2013 Policy Statement
defines and uses the word ``minority'' to reference four categories of
individuals (African Americans, Asian Americans, Hispanic Americans,
and Native Americans). The 2013 Policy Statement also uses the word
``minority'' as part of the term ``minority depository institution''
but, in this context, ``minority'' may have several possible meanings.
To address any confusion caused by the use of the word ``minority,''
the revised policy statement uses (1) ``minority individual'' to mean
the four categories of individuals discussed above and (2) ``minority''
to mean minority individuals, women, and other socially and
economically disadvantaged individuals, including when ``minority'' is
used in ``minority depository institution.'' The OCC does not intend
for these changes to have a substantive effect but believes they
clarify the document.
Federal mutual savings associations. The 2013 Policy Statement
provides that the OCC may consider two categories of Federal mutual
savings associations as MDIs. The first category is a Federal mutual
savings association where a majority of its Board of Directors and the
community it serves are predominantly minority. This description
largely mirrors the definition in section 308 of FIRREA for MDIs that
are Federal mutual savings associations, except that the statute also
requires that the majority of savings association's account holders are
minority individuals. In order to make this reference consistent with
section 308, the revised policy statement adds the account holder
element to this description.
Second, the 2013 Policy Statement provides that the OCC may
consider a Federal mutual savings association an MDI if women comprise
a majority of its Board of Directors and hold a significant percentage
of its senior management positions. In the revised policy statement,
the OCC expands this category of MDIs to include Federal mutual savings
associations if (1) minority individuals or (2) other socially and
economically disadvantaged individuals comprise a majority of the Board
of Directors and hold a significant percentage of the senior management
positions. The OCC is not aware of any reason to limit these
composition requirements to women-led mutual MDIs. By expanding the
definition, the revised policy statement creates parity for all Federal
mutual savings associations covered and encourages the creation of new
MDIs. Therefore, under the revised policy statement, a bank can satisfy
its ownership threshold or composition component (as applicable,
depending on whether the bank is a national bank, Federal stock savings
association, or Federal mutual savings association) with reference to
(1) minority individuals, (2) women, or (3) other socially and
economically disadvantaged individuals.
Other socially and economically disadvantaged individuals. The 2013
Policy Statement references ``minorities, women, and socially and
economically disadvantaged individuals.'' To clarify that minority
individuals (which, as discussed above, references African Americans,
Asian Americans, Hispanic Americans, and Native Americans) and women
are examples of individuals that the OCC has determined are ``socially
and economically disadvantaged,'' the revised policy statement includes
the word ``other'' before the term ``socially and economically
disadvantaged individuals.''
Section 3. Formation, Designation, and On-Going Review. In a
section entitled ``Formation of MDIs,'' the 2013 Policy Statement
briefly outlines some of the types of advice and technical assistance
the OCC provides to individuals interested in a bank charter and an MDI
designation. It also explains that certain MDIs may be eligible for
designation as a community development bank and why this is
advantageous. The 2013 Policy Statement does not explain how an MDI is
formed or designated. The OCC believes that this information would be
helpful to stakeholders and other interested parties, and the revised
policy statement includes a discussion of these topics.
De novo bank formation and designation. Specifically, in subsection
A of section 3, the revised policy statement explains that the process
of forming a de novo bank designated as an MDI involves two steps: an
applicant must (1) file an application and receive approval to form a
bank and then (2) request to be designated as an MDI. If the OCC
determines that all of the applicable requirements are met, the OCC
will provide (1) a letter approving
[[Page 47031]]
the formation of the bank and (2) a separate letter approving the MDI
designation. The revised policy statement also explains that for
individuals interested in this process, the OCC offers advice and
technical assistance, including through pre-filing and exploratory
meetings, and directs requests for assistance to OCC Licensing.
Designation of existing banks. In subsection B of section 3, the
revised policy statement explains that an existing bank that believes
it qualifies as an MDI also may request designation from the OCC. If
the OCC determines that the bank satisfies the applicable requirements,
the agency will provide the bank with an MDI designation letter. The
revised policy statement explains that the OCC offers advice and
technical assistance to banks interested in MDI designation and
explains that requests for assistance should be directed to the MDIAC
Designated Federal Officer.
Continued designation. The ``Definition of MDIs'' section of the
2013 Policy Statement states that the OCC, at its discretion, may
continue to treat a previously designated bank as an MDI even if the
bank no longer meets the ``ownership'' threshold, provided that (1) the
bank primarily serves the credit and other economic needs of the
community in which it is chartered and (2) the community is
predominantly minority. In subsection C of section 3, the revised
policy statement addresses continued designation but includes several
changes from the 2013 Policy Statement.
First, by referencing ``ownership,'' the 2013 Policy Statement
limits the continued designation option to national banks and Federal
stock savings association, to the exclusion of Federal mutual savings
associations. The OCC is not aware of any reason that continued
designation should exclude Federal mutual savings associations, and the
revised policy statement provides that the OCC can exercise its
discretion to continue to designate a previously designated bank,
regardless of the type of bank.
Second, the 2013 Policy Statement provides the OCC with discretion
to treat a bank previously designated as an MDI as covered by the 2013
Policy Statement, even if the bank no longer meets the ownership
criteria, if (1) the bank primarily serves the credit and other
economic needs of the community in which it is chartered; and (2) the
bank's community is predominantly minority. In the revised policy
statement, the OCC revises the wording of both prongs of this
statement. Specifically, prong (1) states that the agency has the
discretion to continue to designate a bank as an MDI if the bank
``supports the economic viability'' of its community. The agency
believes that this change more effectively highlights the important
role of MDIs in supporting the economic viability of their communities,
of which the services the MDIs provide may only be a part. Prong (2) of
the revised policy statement provides that continued designation is
possible if the community the bank serves is comprised predominantly of
minority individuals, women, or other socially and economically
disadvantaged individuals. This change reflects the fact that the
communities MDIs serve include not only minority individuals, but also
women and other socially and economically disadvantaged individuals.
On-going review. The revised policy statement explains that the
OCC, on an annual basis, reviews whether a bank designated as an MDI
continues to satisfy the meaning of MDI described in section 2 or
whether continued designation is appropriate. Although there is no
similar provision in the 2013 Policy Statement, this practice ensures
that banks designated as MDIs continue to merit such designation.
Community development banks. Finally, as noted previously, the 2013
Policy Statement includes a discussion of community development banks.
In the revised policy statement, the OCC removes this discussion
because it is outside of the scope of this policy statement. This
change has, however, no substantive effect.
Section 4. List of OCC-Supervised MDIs and Related Information.
Both the 2013 Policy Statement and the revised policy statement state
that the OCC maintains a list of the MDIs it supervises, along with
related information, at <a href="http://www.occ.gov">www.occ.gov</a>. There are no material changes to
this section.
Section 5. Support for MDIs. In a section entitled ``Examination
Support for MDIs,'' the 2013 Policy Statement explains that the OCC
annually develops a supervisory strategy for each MDI based on its
unique risk profile and need for technical assistance, training, and
education. This section also outlines how the OCC assigns managers,
examiners, and expert advisors responsible for MDI supervision;
provides guidance to MDIs; exchanges relevant information and best
practices; and keeps up-to-date on important topics and emerging
concerns about MDIs.
The revised policy statement includes several structural changes to
this section. It changes the section's heading to ``Support for MDIs''
to align with its focus and moves information related to MDI strategy
and support from the 2013 Policy Statement's ``Resolution'' section to
this section. The revised policy statement also sets forth examples of
support provided to MDIs in section 5, as well as streamlines the
information presented, as necessary to promote greater clarity and
transparency.
The 2013 Policy Statement includes a section entitled ``Capital for
MDIs,'' which states that the OCC supports banks' investments in MDIs
pursuant to their public welfare investment authorities and such
investments may receive positive consideration under CRA. In another
section, entitled ``Supporting MDIs through the Community Reinvestment
Act,'' the 2013 Policy Statement notes that majority-owned institutions
are often key partners with MDIs and that, for purposes of CRA, the OCC
considers capital investment, loan participation, and other ventures
undertaken in cooperation with MDIs, if such activities help meet the
credit needs of the MDIs' communities.
In the revised policy statement, the information from these two
sections is combined and updated in new section 5. The revised section
acknowledges that depository institutions that are not MDIs (non-
minority depository institutions or NMDIs) are often key partners with
MDIs and notes that the OCC actively supports relationships between
MDIs and NMDIs and provides resources to help identify relevant
partnership opportunities.
This section also provides a streamlined description of the types
of support that a NMDI can provide to MDIs. It provides examples of
direct and indirect financial support that NMDIs can provide through an
applicable investment authority, including investing in MDI-issued
subordinated debt; placing deposit funds in an MDI; purchasing MDI-
issued capital stock; and engaging in a loan participation with an MDI.
It also describes other types of support an NMDI can provide, including
collaborating with MDIs on products and services (e.g., in-kind
services that aid an MDI in serving its customers) and contributing
excess real estate to MDIs (e.g., surplus branch facilities). These
examples are intended to provide stakeholders with clear and useful
information.
In addition, the revised policy statement states that the OCC
considers capital investments, loan participations, and other ventures
undertaken by NMDIs in cooperation with minority- and women-owned
financial institutions and low-income credit
[[Page 47032]]
unions,\16\ provided the activities help meet the credit needs of the
local communities served by the financial institutions or credit
unions. In addition, as discussed in the revised policy statement,
NMDIs that invest in MDIs may receive positive consideration under the
CRA.
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\16\ See 12 U.S.C. 2903(b).
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Section 6. Attribution of Investments for Purposes of the Ownership
Threshold. The 2013 Policy Statement does not address when an
individual's investment in an MDI can be attributed to the MDI for
purposes of the ownership threshold. To address this issue, the revised
policy statement states that an investment in an MDI by a natural
person may be attributed to the MDI ownership threshold only if the
natural person is a minority individual, woman, or other socially and
economically disadvantaged individual.\17\ An investment in an MDI by a
corporation, partnership, or other entity may be attributed to the MDI
ownership threshold only if the corporation, partnership, or entity is
(1) also an MDI or (2) at least 51 percent owned by one or more
minority individuals, women, or other socially and economically
disadvantaged individuals. The revised policy statement includes in a
footnote an example of how this method of attribution would work,
stating that an investment in an MDI by a private equity fund would
count toward the 51 percent ownership threshold requirement only if the
fund itself is at least 51 percent owned by one or more minority
individuals, women, or other socially and economically disadvantaged
individuals. This method of attribution is designed to ensure that the
special character of an MDI is not diluted by investments in the MDI.
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\17\ As noted previously, (1) ``individual'' means a natural
person, corporation, partnership or entity and (2) ``woman'' and
``women'' incorporate the definition of ``individual'' and are not
limited to natural persons.
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Section 7. Resolution of Supervisory Cases. The 2013 Policy
Statement explains that in resolving a supervisory case involving an
MDI, the OCC encourages remedies, including mergers and acquisitions,
which are consistent with the MDI's safety and soundness and the goal
of maintaining its minority ownership. The revised policy statement
includes a similar explanation, streamlined for clarity, stating that
in the unlikely event that the OCC must resolve an MDI, the agency
seeks remedies (including mergers and acquisitions) that are consistent
with and aim to maintain the MDI's safety and soundness and its
character, in accordance with the goals of section 308 of FIRREA. These
changes do not signal a policy change.
Section 8. The MDIAC and Other MDI-Focused Initiatives. The 2013
Policy Statement includes a discussion of OCC initiatives that, as of
2013, provided support to MDIs and helped inform agency decision-making
with respect to MDIs. The revised policy statement updates this
information and removes obsolete references where appropriate.
Specifically, the revised policy statement discusses (1) the MDIAC,
including the role of the MDIAC Designated Federal Officer; (2) the
OCC's Director of Minority Outreach; (3) the agency's Minority
Depository Institution Collaboration Initiative; (4) Project REACh; and
(5) the OCC's District Community Affairs Officers.
Section 9. Consultation and Annual Report. The 2013 Policy
Statement states that the OCC consults with the Secretary of the
Treasury on achieving the goals of section 308 of FIRREA and, as
required by law, submits an annual report to Congress on actions take
to carry out those goals. The revised policy statement includes this
information and adds that the OCC's Director of Minority Outreach is
responsible for submitting the annual report to Congress.
Section 10. Conclusion. Both the 2013 Policy Statement and the
revised policy statement conclude with a statement of support for MDIs.
The text of the policy statement is as follows:
OCC Policy Statement on Minority Depository Institutions
1. Introduction
Minority depository institutions (MDIs) are national banks and
Federal savings associations (banks) that support the economic
viability of the communities they serve, including but not limited to
the minority individuals, women, or other socially and economically
disadvantaged individuals in those communities.
The Office of the Comptroller of the Currency (OCC or agency)
recognizes the important role of MDIs in the communities they serve
and, consistent with the agency's mission to ensure a safe and sound
Federal banking system, the OCC actively supports MDIs through a number
of initiatives. The agency's efforts to support MDIs also reflect its
commitment to the goals of section 308 of Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (FIRREA).\1\
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\1\ 12 U.S.C. 1463 (note). The goals of section 308 are to
preserve the number of MDIs; preserve MDIs minority character in
cases of merger or acquisition; provide technical assistance to help
MDIs remain healthy; promote and encourage the creation of new MDIs;
and provide training, technical assistance, and educational
programs.
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2. Meaning of MDI \2\
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\2\ In addition to the other requirements discussed in this
policy statement, an MDI may not be a U.S. subsidiary of a foreign-
owned bank.
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A. National banks or Federal stock savings associations.\3\ The OCC
defines an MDI to include a national bank or Federal stock savings
association that is at least 51 percent owned by one or more minority
individuals, women, or other socially and economically disadvantaged
individuals.\4\
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\3\ A Federal stock savings association may be publicly or
privately owned.
\4\ For purposes of this policy statement, ``individual'' means
a natural person, corporation, partnership or entity. ``Minority
individual'' means a black American, Native American, Hispanic
American, or Asian American individual. Therefore, a bank that is
owned by a minority-owned corporation is owned by a minority
individual. ``Women'' incorporates the definition of ``individual''
and is not limited to natural persons. Therefore, a bank that is
owned by a women-owned corporation is owned by women.
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B. Federal mutual savings associations. The OCC--
i. Defines an MDI to include a Federal mutual savings association
(1) where minority individuals comprise a majority of both its Board of
Directors and its account holders and (2) that serves the credit and
other economic needs of a community comprised predominantly of minority
individuals; and
ii. Considers a Federal mutual savings association to be an MDI if
(1) a majority of its Board of Directors is comprised of minority
individuals, women, or other socially and economically disadvantaged
individuals and (2) minority individuals, women, or other socially and
economically disadvantaged individuals hold a significant percentage of
its senior management positions.
3. Formation, Designation, and On-Going Review
A. De novo bank formation and designation. The process of forming a
de novo bank that is designated as an MDI involves two steps: an
applicant must (1) file an application and receive approval to form a
bank and (2) request that the bank be designated as an MDI. If the OCC
determines that all of the applicable requirements are met, the OCC
will provide (1) a letter approving the formation of a bank and (2) a
separate MDI designation letter. For individuals interested in this
process, the OCC offers advice and technical assistance, including
guidance on determining whether the applicant
[[Page 47033]]
satisfies the meaning of MDI as set forth in section 2 of this policy
statement, through pre-filing and exploratory meetings. Requests for
assistance should be directed to OCC Licensing.
B. Designation of existing banks. A bank that believes it satisfies
the meaning of MDI as set forth in section 2 of this policy statement
may request the OCC designate it as an MDI. If the OCC determines the
bank satisfies the meaning of MDI, the agency will provide the bank
with an MDI designation letter. For banks interested in this process,
the OCC offers advice and technical assistance, including guidance on
determining whether the bank satisfies the meaning of MDI. Requests for
assistance should be directed to the Minority Depository Institution
Advisory Committee Designated Federal Officer.
C. Continued designation. At its discretion, the OCC may continue
to designate as an MDI a bank that no longer satisfies the meaning of
MDI as set forth in section 2 of this policy statement if the bank
supports the economic viability of a community comprised predominantly
of minority individuals, women, or other socially and economically
disadvantaged individuals.
D. On-going review. On an annual basis, the OCC reviews whether (1)
a bank designated as an MDI continues to satisfy the meaning of MDI as
set forth in section 2 of this policy statement or (2) continued
designation is appropriate.
4. List of OCC-Supervised MDIs and Related Information
The OCC maintains a list of OCC-supervised MDIs and information
about MDI initiatives and related events on its website at <a href="http://www.occ.gov">www.occ.gov</a>.
5. Support for MDIs
The OCC develops an annual strategy to support MDIs. The strategy
is designed to support their financial vitality and safe and sound
operations and to address unique risks facing MDIs. As needed, the OCC
supports MDIs by providing training, technical assistance, and
educational programs in such areas as compliance, risk management, and
operations.
The OCC recognizes that depository institutions that are not MDIs
(non-minority depository institutions or NMDIs) can be key partners
with MDIs. The agency actively supports these relationships, which can
be valuable tools for assisting MDIs, and provides resources to help
identify relevant partnership opportunities.
For example, NMDIs may provide direct or indirect financial support
for MDIs through an applicable investment authority.\5\ This type of
support includes an NMDI (1) investing in subordinated debt issued by
an MDI; (2) placing deposit funds in an MDI; (3) purchasing MDI-issued
capital stock (e.g., common or preferred stock); and (4) engaging in a
loan participation with an MDI. Other types of support that an NMDI can
offer include collaborating with an MDI on products and services (e.g.,
in-kind services that aid an MDI in serving its customers) and
contributing excess real estate to an MDI (e.g., surplus branch
facilities).
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\5\ See, e.g., national banks' public welfare investment
authority (12 CFR part 24) and Federal savings associations'
community development investment authority (12 CFR 160.36).
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In assessing the record of an NMDI under the Community Reinvestment
Act (CRA) and its implementing regulations,\6\ the OCC considers
capital investments, loan participations, and other ventures undertaken
in cooperation with minority- and women-owned financial institutions
and low-income credit unions if such activities help meet the credit
needs of the local communities served by the MDI or low-income credit
union. NMDIs that invest in MDIs may receive positive consideration
under the CRA if those investments are consistent with the requirements
of the CRA and its implementing regulations.
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\6\ See 12 U.S.C. 2901 et seq. and 12 CFR part 25.
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6. Attribution of Investments for Purposes of the Ownership Threshold
An investment in an MDI by a natural person may be attributed to
the MDI ownership threshold only if the natural person is a minority
individual, woman, or other socially and economically disadvantaged
individual.
An investment in an MDI by a corporation, partnership, or entity
may be attributed to the MDI ownership threshold only if the
corporation, partnership, or entity is (1) also an MDI or (2) at least
51 percent owned by one or more minority individuals, women, or other
socially and economically disadvantaged individuals.\7\
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\7\ See supra note 4 (meaning of ``individual,'' ``minority
individual,'' and ``women''). For example, an investment in an MDI
by a private equity fund would count toward the 51 percent ownership
threshold only if the fund itself is at least 51 percent owned by
one or more minority individuals, women, or other socially and
economically disadvantaged individuals.
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7. Resolution of Supervisory Cases
In the unlikely event that it is necessary to resolve an MDI, the
OCC seeks remedies (including mergers and acquisitions) that are
consistent with and aim to maintain the MDI's safety and soundness and
its character, in accordance with the goals of section 308 of FIRREA.
8. Minority Depository Institution Advisory Committee and Other MDI-
Focused Initiatives
In addition to the initiatives discussed above, the OCC's Minority
Depository Institution Advisory Committee (MDIAC) and other MDI-focused
initiatives also help to support MDIs. Information about these
initiatives can be found on the website at <a href="http://www.occ.gov">www.occ.gov</a> and include the
following:
A. MDIAC. The MDIAC is an OCC-chartered advisory committee
organized in accordance with the Federal Advisory Committee Act
(FACA).\8\ The MDIAC includes officers and directors of MDIs and other
depository institutions committed to supporting MDIs and provides
advice to the OCC on meeting the goals in section 308 of FIRREA. As
required by FACA, the OCC has an MDIAC Designated Federal Officer, who
is responsible for the MDIAC and serves as the OCC's primary point of
contact on MDI matters.
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\8\ See 5 U.S.C. appendix 2.
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B. Director of Minority Outreach. The OCC's Director of Minority
Outreach coordinates the agency's interdepartmental and interagency
outreach efforts, including interagency conferences and other
activities.
C. Minority Depository Institution Collaboration Initiative. The
OCC's Minority Depository Institution Collaboration Initiative promotes
collaboration and relationships between MDIs and larger NMDIs and is
designed to provide access to products and services that promote
empowerment to disadvantaged and underserved communities, economic
independence, job creation, and community development/revitalization.
This initiative is coordinated by the OCC's Midsize and Community Bank
Supervision (MCBS) staff.
D. Project Roundtable for Economic Access and Change (REACh). The
OCC-established Project REACh promotes financial inclusion through
greater access to credit and capital. Project REACh brings together
leaders from the banking industry, national civil rights organizations,
other businesses, and the technology industry to reduce specific
barriers that prevent full, equal, and fair participation in the
nation's economy. Project REACh supports MDIs through its MDI
Revitalization Workstream, which addresses the challenges MDIs face in
accessing capital, expanding
[[Page 47034]]
technology capabilities, and modernizing infrastructure. Project REACh
is coordinated by the OCC's Director of Minority Outreach. Information
on Project REACh is available at Project REACh.
E. District Community Affairs Officers. The OCC's District
Community Affairs Officers provide advice and technical assistance to
MDIs interested in structuring community development investments and
initiatives and identifying opportunities for relationships between
NMDIs and MDIs.
9. Consultation and Annual Report
The Secretary of the U.S. Department of the Treasury consults with
the Comptroller of the Currency, under section 308 of FIRREA, on the
methods for best achieving the goals of section 308 of FIRREA. The law
also directs the OCC to submit an annual report to Congress on the
actions taken to carry out these goals. The OCC's Director of Minority
Outreach is responsible for submitting the annual report to Congress.
10. Conclusion
The OCC recognizes the important role of MDIs in the communities
they serve and actively supports MDIs through the initiatives discussed
above.
Michael J. Hsu,
Acting Comptroller of the Currency.
Dated: July 26, 2022.
Michael J. Hsu,
Acting Comptroller of the Currency.
[FR Doc. 2022-16345 Filed 7-29-22; 8:45 am]
BILLING CODE 4810-33-P
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</html>Indexed from Federal Register on August 1, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.