Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency propose targeted CRA changes, raise large-bank threshold to over USD 10 billion

The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency have proposed targeted changes to their Community Reinvestment Act (CRA) rules that would retain the core framework applied since 1995 while placing greater weight on lending, tightening the treatment of community development grants and reducing requirements for community banks. The proposal would classify banks with less than USD 1 billion in assets as small, those with USD 1 billion to USD 10 billion as intermediate and those with more than USD 10 billion as large. Banks with USD 10 billion or less would generally be exempt from CRA data collection, maintenance and reporting requirements and subject to more flexible performance standards. CRA lending evaluations would focus on banks’ major retail product lines, while the service test would consider credit services but exclude deposit services. Grants and donations would qualify only when recipients use them directly for community development programs, projects or initiatives, and recipients of grants from large banks could allocate no more than 15% to indirect administration costs. Other changes would clarify qualifying community development activities, establish an eligibility confirmation process, permit conditional consideration of activities outside assessment areas, simplify strategic plans and move public files and notices online. The proposal follows the injunction that prevented the agencies’ 2023 CRA rules from taking effect. Comments are due 60 days after publication in the Federal Register.