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    OCC to Finalize Principles on Climate Risk Management Later This Year

    March 07, 2022

    The Office of the Comptroller of the Currency's (OCC) Acting Comptroller, Michael J. Hsu discussed climate risk management and diversity and inclusion, at the Institute of International Bankers Annual Washington Conference while certain US agencies published a statement on special purpose credit programs under the Equal Credit Opportunity Act and Regulation B.

    The OCC Acting Comptroller noted that, later this year, OCC plans to finalize the principles on identification and management of climate-related financial risks for large banks (>USD 100 billion in assets) and then develop more detailed guidance. The plan is to do so on an interagency basis with the Federal Reserve Bank (FED) and the Federal Deposit Insurance Corporation (FDIC). OCC had proposed the draft principles in December 2021. After an appropriate transition period, the agencies (FDIC, FED, and OCC) will then begin assessing climate risk management capabilities of large banks. The US Agencies published an interagency statement.

    Additionally, the interagency statement, from the US Agencies, on special purpose credit programs reminds creditors of the ability under the Equal Credit Opportunity Act and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons. These US Agencies are FDIC, FED, the Consumer Financial Protection Board (CFPB), the National Credit Union Administration, OCC, the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Justice, and the Federal Housing Finance Agency. The statement also calls attention to the recent HUD guidance concluding that special purpose credit programs instituted in conformity with Equal Credit Opportunity Act and Regulation B generally do not violate the Fair Housing Act. Accordingly, creditors may consider the use of special purpose credit programs across all types of credit covered by Equal Credit Opportunity Act and Regulation B. The agencies encourage creditors to explore opportunities to develop special purpose credit programs consistent with the Equal Credit Opportunity Act and Regulation B requirements as well as applicable safe and sound lending principles. Equal Credit Opportunity Act and Regulation B permit creditors to extend special purpose credit offered pursuant to any:

    • credit assistance program expressly authorized by Federal or state law for the benefit of an economically disadvantaged class of persons
    • credit assistance program offered by a not-for-profit organization for the benefit of its members or an economically disadvantaged class of persons
    • special purpose credit program offered by a for-profit organization, or in which such an organization participates to meet special social needs, if it meets certain standards prescribed in regulations by CFPB

     

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    Keywords: Americas, US, Banking, Climate Change Risk, ESG, Lending, Special Purpose Credit Programs, Credit Risk, OCC, US Agencies

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