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Banking Agencies Issue Proposed Community Reinvestment Act Overhaul
Practical Law Legal Update w-035-4929 (Approx. 3 pages)
Banking Agencies Issue Proposed Community Reinvestment Act Overhaul
by Practical Law Finance
| Published on 11 May 2022 • USA (National/Federal) |
The Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (FRB), and Office of the Comptroller of the Currency issued a proposed joint rule to overhaul and modernize regulations implementing the Community Reinvestment Act (CRA).
On May 5, 2022 the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (FRB) and the Office of the Comptroller of the Currency (OCC) (together, the Agencies) issued a proposed rule (Proposed Rule) that seeks to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA). The agencies also issued a CRA fact sheet and seek feedback on the Proposed Rule.
The intent of the Proposed Rule is to significantly expand the scope and rigor of CRA and expand access to credit, investment, and basic banking services in LMI communities across the United States.
Key provisions of the Proposed Rule include:
- Expanding access to credit, investment, and basic banking services in LMI communities through requirements that would:
- evaluate bank performance across both the varied activities they conduct and communities in which they operate so that the CRA is a strong and effective tool to address inequities in access to credit;
- promote community engagement and financial inclusion; and
- emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities.
- Updating CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
- Providing greater clarity, consistency, and transparency under provisions that would adopt:
- a metrics-based approach to CRA evaluations of retail lending and community development financing, with public benchmarks, for greater clarity and consistency;
- clarification of eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities;
- tailored CRA evaluations and data collection to bank size and type. For example, smaller banks would continue to be evaluated under the existing CRA regulatory framework but would be granted an option to be evaluated under aspects of the new framework.
- Maintain a unified bank regulatory approach to enforcing the CRA.
Comments to the 2022 NPR must be received on or before August 5, 2022.
For more information on existing CRA requirements, see Practice Note, Community Reinvestment Act Requirements for Banks.