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FOR IMMEDIATE RELEASE
October 24, 2006
Contact: Bryan Hubbard
Legislation Takes Effect to Raise Limit on Community Development Investments
WASHINGTON, DC -- The Office of Comptroller of the Currency has advised national banks that they can begin taking advantage of increased limits for public welfare investments.
The Financial Services Regulatory Relief Act of 2006 increased the limit on public welfare investments, commonly known as Part 24 investments, from 10 to 15 percent of a national bank’s capital and surplus. While national banks generally can make public welfare investments up to 5 percent of the bank’s capital and surplus without prior OCC approval, the new rules allow them to invest an additional 10 percent (15 percent total) if the OCC determines that additional investment will not pose a risk to the deposit insurance fund and that the lender is not undercapitalized.
"The increase has the potential to generate an additional $30 billion in private investments that go toward strengthening our communities," said Comptroller of the Currency John C. Dugan, a strong advocate for the increased authority. "These investments support critically needed public welfare initiatives, helping low- and moderate-income communities and families. They do so in a manner that not only benefits the communities served, but also enjoys a solid track record of profitability and safety and soundness. These investments are good for our neighborhoods, good for citizens, and good for business."
The bulletin also explained a change to the standards for these investments. Each public welfare investment by a national bank or its subsidiary must benefit primarily low- and moderate-income communities or families (such as by providing housing, services, or jobs). Any public welfare investment or written commitment to make such an investment made under the standards in effect before October 13, 2006, is not affected by this change.
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