The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System; and Federal Deposit Insurance Corporation (FDIC) have jointly issued a final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) to better achieve the purposes of the law.
Building on feedback from commenters on the proposed rule and research, the final rule updates the CRA regulations to achieve the following key goals:
- Encourage banks to expand access to credit, investment, and banking services in LMI communities: Under the final rule, the agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate so that the CRA continues to be a strong and effective tool to address inequities in access to credit and financial services. It promotes financial inclusion by supporting bank activities with Minority Depository Institutions and Community Development Financial Institutions and in Native Land Areas, rural areas, persistent poverty areas, and other high–need areas.
- Adapt to changes in the banking industry, including internet and mobile banking: The final rule will update the CRA regulations to evaluate lending outside traditional assessment areas generated by the growth of non–branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models. It is calibrated to recognize the continued importance of bank branches, while establishing a framework to evaluate the digital delivery of banking products and services for certain banks.
- Provide greater clarity and consistency in the application of the CRA regulations: The final rule adopts a new metrics–based approach to evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data. The agencies will develop data tools using reported loan data that give banks and the public additional insight into performance standards. The final rule also clarifies eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, native, and rural communities.
- Tailor CRA evaluations and data collection to bank size and type: The final rule recognizes differences in bank size and business models. For example, small banks will continue to be evaluated under the existing framework with the option to be evaluated under the new framework. The rule also exempts small and intermediate banks from new data requirements that apply to banks with assets of at least $2 billion and limits certain new data requirements to large banks with assets greater than $10 billion.
“Expanding financial access and inclusion for low-and moderate-income communities is essential to ensuring that the country’s financial system serves all Americans,” said Acting Comptroller of the Currency Michael J. Hsu. “I am proud that the FDIC, OCC, and Federal Reserve have come together to jointly issue this final rule to strengthen and modernize the Community Reinvestment Act.”
The CRA was enacted nearly 50 years ago to encourage banks to help meet the credit needs of their entire communities, especially in low– and moderate–income (LMI) neighborhoods, in a safe and sound manner.
“I applaud the Fed, FDIC, and OCC for issuing their final rule to strengthen the Community Reinvestment Act (CRA),” said Rep. Maxine Waters, the top Democrat on the House Financial Services Committee. “In 1977, Congress enacted the CRA, a civil rights piece of legislation, into law in response to decades of persistent racist policies in banking like redlining, where banks would systemically deny the provision of mortgages and other financial products and services to certain areas based on race or ethnicity. Redlining robbed Black families and other families of color of the opportunity to build wealth through the American dream of homeownership. Now, more than four decades later, the unfortunate truth is that the implementation of the law has not kept up with changes in the banking system, and as a result, not much has changed to turn the tide to ensure homeownership is truly a reality for all. In fact, as it stands today, the homeownership gap is wider now than it was in 1968 when redlining was legal. This is simply unacceptable and yet another reason why strengthening CRA’s implementation is so critically important.”
Most of the rule’s requirements will be applicable beginning January 1, 2026, while the remaining requirements, including the data reporting requirements, will be applicable on January 1, 2027.