Treasury Secretary Steven Mnuchin appointed Otting’s deputy, Brian P. Brooks, to take over the Office of Comptroller of the Currency on an acting basis. Brooks was once a top executive at OneWest Bank, which Mnuchin owned and where Otting served as chief executive. Brooks “recognizes the importance of a robust federal banking system to the health and strength of the nation’s economy and has the skills and experience to succeed in this important role,” Mnuchin said in a statement.
Otting often cited his decades of banking industry experience while leading an agency that plays a critical role in regulating massive financial institutions, such as Wells Fargo and JPMorgan Chase. In a statement, Otting said he was “extremely proud” of his efforts at the OCC to “eliminate unnecessary regulatory burden.”
But Otting appeared to chafe at the confinements of Washington and was often at odds with Democrats on Capitol Hill. He stumbled early in his tenure after telling lawmakers he had “personally never observed [discrimination], but many of my friends from the inner city across America will tell me that it is evident today.” The statement was often cited by Democrats during contentious congressional hearings.
His chief accomplishment will probably be finalizing a sweeping overhaul of the Community Reinvestment Act, which Otting often called his top priority at the OCC, citing his experience with the law at OneWest. During the 2008 global financial crisis, Mnuchin led a team of investors that purchased IndyBank and hired Otting to lead it. But when they tried to sell the bank, which had been renamed OneWest, community groups questioned its Community Reinvestment Act compliance, hampering the regulatory approval process.
Under the law, regulators periodically examine banks’ lending practices for low- and moderate-income borrowers. A bank may get CRA credit, for example, for issuing a mortgage to a black borrower, financing an affordable-housing project or offering a small-business loan. Complying with the law influences the billions a year banks that lend in minority communities. Those given a low rating can be sanctioned.
Under the rules finalized Wednesday, the OCC clarified and expanded what qualifies for CRA credit, giving banks more flexibility in deciding where to invest.
The scale of the changes — and that they were completed during the coronavirus pandemic — drew immediate criticism from Democrats who said Otting had made it easier for banks to pass their exams but not done enough to protect minority and low-income borrowers.
Three advocacy groups, including the National Community Reinvestment Coalition and California Reinvestment Coalition, said Thursday that they would sue the OCC to block implementation of the new rule.
The OCC “introduced new, gaping loopholes into the rules that will allow banks to reduce their focus on…