June 3 -- Community Reinvestment Act: A Proposed Rule by the Comptroller of the Currency, the Federal Reserve System, and the Federal Deposit Insurance Corporation
The Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) propose to amend their regulations implementing the Community Reinvestment Act of 1977 (CRA) to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. Comments must be received on or before August 5, 2022.
In this Notice of Proposed Rulemaking (NPR or proposal), the OCC, Board, and the FDIC, (together referred to as “the agencies”) seek feedback on changes to update and clarify the regulations to implement the CRA. The CRA encourages banks to help meet the credit needs of the local communities in which they are chartered, consistent with a bank's safe and sound operations, by requiring the Federal banking regulatory agencies to examine banks' records of meeting the credit needs of their entire community, including low- and moderate-income neighborhoods.
The agencies implement the CRA through their CRA regulations. The CRA regulations establish the framework and criteria by which the agencies assess a bank's record of helping to meet the credit needs of its community, including low- and moderate-income neighborhoods, consistent with safe and sound operations. Under the CRA regulations, the agencies apply different evaluation standards for banks of different asset sizes and types.
This NPR seeks to update the CRA regulations in adherence with objectives that include the following:
Update CRA regulations to strengthen the achievement of the core purpose of the statute;
Adapt to changes in the banking industry, including the expanded role of mobile and online banking;
Provide greater clarity and consistency in the application of the regulations;
Tailor performance standards to account for differences in bank size and business models and local conditions;
Tailor data collection and reporting requirements and use existing data whenever possible;
Promote transparency and public engagement;
Confirm that CRA and fair lending responsibilities are mutually reinforcing; and
Create a consistent regulatory approach that applies to banks regulated by all three agencies.
A key part of the proposal is a new evaluation framework for evaluating CRA performance for banks. The agencies propose an evaluation framework that would establish the following four tests for large banks: Retail Lending Test; Retail Services and Products Test; Community Development Financing Test; and Community Development Services Test. Intermediate banks would be evaluated under the Retail Lending Test and the status quo
community development test, unless they choose to opt into the Community Development Financing Test. Small banks would be evaluated under the status quo small bank lending test, unless they choose to opt into the Retail Lending Test. Wholesale and limited purpose banks would be evaluated under a tailored version of the Community Development Financing Test.
The agencies request feedback on all aspects of the proposal, including but not limited to the specific questions outlined in the SUPPLEMENTARY INFORMATION. The agencies are setting forth in this SUPPLEMENTARY INFORMATION the proposed rule using common regulation text for ease of commenter review. The agencies are proposing agency-specific amendatory text where necessary to account for differing agency authority and terminology.
Correction issued (7.5.22): https://www.federalregister.gov/d/C1-2022-10111
May 5 -- Agencies issue joint proposal to strengthen and modernize Community Reinvestment Act Regulations (FRB press release)
Federal bank regulatory agencies today jointly issued a proposal to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) to better achieve the purposes of the law. CRA is a landmark law enacted 45 years ago to encourage banks to help meet the credit needs of their local communities, including low- and moderate-income (LMI) neighborhoods, in a safe and sound manner.
Building on feedback from stakeholders and research, the agencies invite public comment on their joint proposal, which has the following key elements:
Expand access to credit, investment, and basic banking services in low- and moderate-income communities. Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit. The proposal would promote community engagement and financial inclusion. It would also emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities.
Adapt to changes in the banking industry, including internet and mobile banking. The proposal would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
Provide greater clarity, consistency, and transparency. The proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency. It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities.
Tailor CRA evaluations and data collection to bank size and type. The proposal recognizes differences in bank size and business models. It provides that smaller banks would continue to be evaluated under the existing CRA regulatory framework with the option to be evaluated under aspects of the new proposed framework.
Maintain a unified approach. The proposal reflects a unified approach from the bank regulatory agencies and incorporates extensive feedback from stakeholders.
Comments on the proposal will be accepted on or before August 5, 2022.
FRB Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20220505a.htm
FRB CRA proposed rulemaking webpage: https://www.federalreserve.gov/consumerscommunities/community-reinvestment-act-proposed-rulemaking.htm
Fact sheet: https://www.federalreserve.gov/consumerscommunities/files/cra-fact-sheet-20220505.pdf
FDIC CRA announcement: https://www.fdic.gov/news/financial-institution-letters/2022/fil22018.html
OCC CRA announcement: https://www.occ.treas.gov/news-issuances/bulletins/2022/bulletin-2022-14.html