[Photo: Downgrade - Colin / Flickr]

The Comptroller of the Currency is expected to issue a downgrade of Wells Fargo on its community-lending scorecard, which could hamper the bank's business activity and growth. An OCC announcement had been expected as early as Thursday afternoon, but it never came. Perhaps by early next week.

In handing down an downgrade, the OCC may take advantage of a longstanding rule in the Community Reinvestment Act, which permits regulators to lower a bank’s rating if it engages in unfair and deceptive practices.

Wells Fargo hasn’t had a CRA grade released since 2009 and banks are supposed to be examined every 3 years. In fact, the OCC has had a system-wide backlog that it is trying to work through. With many exams in the near future, it's likely that more banks will get downgraded, people familiar with the effort said.

This is “a major issue because there’s never been so many institutions that are supposed to be examined every 2 to 3 years that are not having an exam report released for every seven to eight years,” said John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group.

CRA ratings are related to banks’ work in lower-to-moderate income neighborhoods. The rating is used to evaluate applications for future approval of bank M&A and branch openings, among other business matters.