FDIC, OCC Issue Proposed Rulemaking on CRA Rules

The FDIC and the OCC recently issued a notice of proposed rulemaking regarding the Community Reinvestment Act (CRA) rules, which, among other things, seeks to increase the CRA’s focus on lending, ease burdens on smaller banks, and ensure community development funds reach the intended communities.  This proposed rule comes after the 2023 final CRA rule that was previously issued by the FDIC, OCC, and Federal Reserve.  That prior final rule was subject to litigation and the FDIC, OCC, and the Federal Reserve subsequently announced an intent to rescind it, as discussed by WBK here.  However, instead of finalizing the rescission, the FDIC and the OCC have now issued this proposed rule.  The Federal Reserve has not joined in this proposal, as such, it remains to be seen what steps the Federal Reserve will take with respect to the proposed rule and the rescission of the prior final rule.

To increase the focus on lending, proposed changes include excluding deposit services from what is considered “retail banking services” within the performance criterion.  In relation to the qualitative factors within the performance tests and standards, it proposes clarifying “responsiveness” and adding a definition for “complexity.”

The notice also proposes that CRA consideration only be permitted for grants that are directly used by a program with the primary purpose of community development in the local community of the bank, and for large banks the recipient’s grant administration costs could not exceed 15 percent.

To ease burdens on smaller banks, the proposal includes a change to create three asset thresholds for banks: (i) small banks, with assets below $1 billion; (ii) intermediate banks, with assets of between $1 to $10 billion; and (iii) large banks, with assets above $10 billion.  Then, “small” and “intermediate” banks would have fewer data collection, maintenance, and reporting requirements.  To more generally ease burdensome requirements, public file and public notice requirements would allow using technology, such as websites to meet the requirement.

The notice also proposes further defining the four categories of “community development activities,” and codifying the list of community development activity examples.

Comments are due on or before October 13, 2026.