The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have jointly proposed significant amendments to their Community Reinvestment Act (CRA) rules. These changes aim to refocus on encouraging banks to meet community credit needs, ensure community development grants effectively reach their intended beneficiaries, reduce regulatory burden, particularly for community banks, and provide greater clarity on how to obtain CRA consideration.
The proposal seeks to align the CRA framework more closely with its statutory mandate by primarily focusing on lending. This involves narrowing the range of retail banking services considered to credit services, excluding deposit services, and clarifying concepts to give greater weight to activities with a direct link to lending. Furthermore, community development grants will be limited to those directly used for projects with community development as a primary purpose, and large banks with assets over $10 billion will need to document that grant recipients' overhead costs do not exceed 15 percent.
To reduce regulatory burden, the agencies propose increasing asset size thresholds for small banks to $1 billion (from $412 million) and for intermediate banks to $10 billion (from $1.65 billion). Banks newly classified as intermediate will be exempt from data collection and reporting requirements. The evaluation of retail lending activities will focus only on a bank’s major product lines, and technology will be leveraged to modernize the availability of public notices and files.
Greater clarity on CRA consideration will be provided through a codified illustrative list of qualifying and non-qualifying community development activities, a clearer definition of community development components, and improved explanations for receiving consideration at various geographic levels. The strategic plan framework will also be modified to be a more viable and less burdensome option for banks. Comments on all aspects of the proposed rule are due 60 days after its publication in the Federal Register.