The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation jointly unveiled proposed revisions to the Community Reinvestment Act on Friday, marking the first substantial regulatory update in approximately three decades.
Under the proposed changes, bank examiners would prioritize lending activity in specific communities and geographic areas while placing less emphasis on branch openings and local deposit collection. The revised definition of a small bank would expand from institutions with assets under $412 million to those with under $1 billion, with banks between $1 billion and $10 billion in assets reclassified as intermediate banks. These adjustments would reduce the number of institutions subject to full CRA compliance to approximately 86 banks, or roughly 3% of all banking institutions.
Another significant modification addresses how banks distribute funds to community development organizations. The new regulations would narrow the types of groups and programs eligible to receive bank donations under CRA obligations, with regulators stating the changes would prevent grants from being “diverted to activist causes or consumed by excessive operating costs.” Banks would also be required to collect more granular data on grant recipients, including addresses, to increase transparency. The changes would discourage banks from making grants to national organizations, focusing instead on local groups.
Critics, including Jesse Van Tol, CEO of the National Community Reinvestment Coalition, expressed concern that the proposed rules would reduce lending activity, particularly in rural areas. The proposal notably excluded the Federal Reserve, one of three major bank regulators, despite industry requests for a coordinated approach from all regulatory bodies. The proposed changes will undergo a 60-day public comment period before finalization, allowing banks, community organizations, and other stakeholders to provide input.
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