WASHINGTON — The Office of the Comptroller of the Currency is revising its policy governing Minority Depository Institutions to more closely align with federal law, eliminating language that identified certain groups as presumed to be socially and economically disadvantaged, the agency announced.
In a bulletin distributed to national banks, federal savings associations and other institutions it supervises, the OCC said the change is part of a broader regulatory review being conducted in response to an executive order issued by President Donald Trump.
According to the OCC, the action follows Executive Order 14219, titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative,” which directs federal agencies to identify and rescind or amend regulations that are unnecessary, lack clear statutory authority or are not based on the best reading of underlying law.
Revised Definition of MDI
The OCC said its updated policy revises the definition of a Minority Depository Institution to more closely align with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, or FIRREA, the statute that established the MDI designation.
Under FIRREA, an MDI is defined based on ownership by socially and economically disadvantaged individuals. However, the OCC noted that the statute itself does not identify any specific groups that are presumed to be socially and economically disadvantaged.
As a result, the agency said it is removing portions of its policy statement that outlined such groups and will instead rely solely on the statutory criteria when determining whether an institution qualifies as an MDI.
The Revised Policy
Under the revised policy, a national bank or federal savings association will qualify as an MDI if at least 51% of the institution is owned by one or more socially and economically disadvantaged individuals, according to the OCC.
For mutual savings associations, an institution will qualify as an MDI if a majority of its board of directors, account holders and the community it serves are predominantly minority, the agency said.
The OCC said those statutory standards will now serve as the sole basis for determining MDI status.
MDI Designations to be Retained
At the same time, the agency said it will maintain the MDI designations of institutions that currently hold that status.
According to the bulletin, the previous policy statement allowed the OCC, at its discretion, to continue designating a bank as an MDI in certain circumstances even if the institution no longer met the statutory definition.
“The updated definition and maintained designations improve the policy statement’s consistency with FIRREA and minimize disruption to current MDIs,” the OCC said in the bulletin.
The change comes as federal agencies continue reviewing regulations and policies under the administration’s broader effort to reduce or revise rules that regulators determine exceed or lack explicit statutory authority.
