By Paul Kiernan 

WASHINGTON -- A top U.S. banking regulator said Wednesday he plans to push ahead with a proposal to overhaul rules governing billions of dollars of lending in low-income neighborhoods despite objections from the Federal Reserve.

Comptroller of the Currency Joseph Otting said he doesn't see time to compromise with the Fed regarding a December proposal that would update federal regulations under the Community Reinvestment Act. The proposal was crafted jointly by his office and the Federal Deposit Insurance Corp.

"There is a structured process now that's in place," Mr. Otting told reporters. He said the Office of the Comptroller of the Currency will receive comments on its proposal until March 9 and issue a final rule about 60 days later. "You know, there's limited ways that the Fed could catch up with us on that."

The growing rift among federal banking regulators makes it likelier that banks will have to navigate different sets of rules under the community reinvestment law, which was enacted in 1977 aimed at ending "redlining" -- the practice of avoiding lending in certain areas, often lower-income communities, deepening racial disparities.

The OCC oversees roughly 70% of activity under the rules, and its proposal would apply to some 1,200 banks -- including some of the biggest, such as JPMorgan Chase & Co. and Wells Fargo & Co. The Fed oversees about 15% of CRA activity.

A Fed spokesman declined to comment.

Earlier this month, Fed governor Lael Brainard -- who is leading the central bank's efforts to update the act -- criticized the joint proposal by the OCC and FDIC. She said it could encourage some banks to meet their CRA requirements through a small number of large loans or investments, potentially reducing many poor and middle-class Americans' access to financing.

The Fed has outlined an alternative plan to encourage large institutions to make many loans in lower-income areas, rather than a small number of big loans and investments.

Mr. Otting acknowledged the possibility that the Fed might issue a different proposal for the banks it regulates, an outcome that the industry wants to avoid.

"My thought or vision will be that we will do a joint OCC-FDIC rule, and then the Fed will have to make a determination whether they want to ultimately, you know, pick what we've done or modify it for the 15% of the banks that they regulate," Mr. Otting said.

Asked whether he saw any potential for compromise with the Fed, he said, "No, not between now and the final rule."

--Andrew Ackerman contributed to this article.

(END) Dow Jones Newswires

January 22, 2020 15:34 ET (20:34 GMT)

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