Bank Regulators Propose Changes to Community Reinvestment Act Rules

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have proposed targeted revisions to their Community Reinvestment Act (CRA) regulations. The Federal Reserve Board of Governors did not join this proposed rule. The CRA requires federal banking regulators to evaluate how well banks meet the credit needs of their full communities, including low- and moderate-income neighborhoods.

According to the OCC and FDIC, the proposal would: 

• More closely align CRA rules with the law’s statutory purpose;
• Help ensure community development grants reach their intended communities;
• Reduce regulatory burdens, especially for community banks; and
• Provide clearer guidance on how banks can receive CRA consideration.

The agencies say the proposal would place greater emphasis on lending and help ensure community development grants and donations benefit the communities they are meant to serve, rather than being used for unrelated activities or excessive operating costs.

The proposal would also narrow the retail banking services considered in CRA evaluations by focusing on credit services and excluding deposit services.

Updates to Asset Thresholds

The OCC and FDIC are proposing substantial increases to banks’ asset thresholds. Under the proposal:

• A “small bank” would have less than $1 billion in total assets, up from the current threshold of $412 million.
• A new “intermediate bank” category would replace the existing “intermediate small bank” category and cover banks with assets from $1 billion through $10 billion; the current range is $412 million to $1.649 billion.
• A “large bank” would have more than $10 billion in assets, compared with the current threshold of more than $1.649 billion.

Banks with $10 billion or less in assets would be exempt from data collection, maintenance and reporting requirements, and would receive more flexible supervision. NAHB is working with industry partners to assess the potential impact of these significantly higher asset thresholds on banks’ Low Income Housing Tax Credit (LIHTC) equity investments as well as other impacts of the proposal.

The agencies say the proposal would also streamline other requirements and make CRA evaluations clearer, more transparent, and more objective for banks of all sizes.

After the rule is published in the Federal Register, the agencies will open a 60-day comment period. NAHB plans to submit comments after publication.