Breaking Advocacy Update: Federal Banking Agencies Issue Final Rule on the Community Reinvestment Act

Yesterday, the Federal Reserve Board, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. released a final rulemaking to reform and align each agency’s Community Reinvestment Act (CRA) framework that depository banks must comply with.

The final rule makes certain changes from the proposed rule, which help to better achieve some of the Agencies’ goals of ensuring that regulations continue to reflect the original intent of the statute, especially in light of significant changes in the banking industry over the last few years.

These changes are fully applicable to large banks (asset size of $2 billion and above) and partially applicable to intermediate banks (asset sizes between $600 million and $2 billion). Small banks (asset sizes of less than $600 million) will continue to be evaluated under the current CRA framework but may choose to opt into the application of the new rules. 

Why it matters: Last year, MBA expressed support for the objectives to update the regulatory framework implementing the CRA and offered recommendations to ensure that the final rule achieves the intended goals of the statute without resulting in unnecessary burdens for the banks that have to implement them. The final rule includes several of MBA’s recommendations, including to increase the threshold for delineating additional assessment areas, revising the weightings assigned to the overall Retail Lending and Community Development tests, maintaining full CRA credit for LIHTC investment, and recognizing Special Purpose Credit Programs in a bank’s CRA rating. The final rule also extends the implementation timeline as requested by MBA, with the first applicability date not until January 2026.

What’s next: MBA is reviewing the nearly 1,500-page final rule and will provide a detailed summary in the coming days. 

For more information, contact Fran Mordi at (202) 557-2860 or Stephanie Milner at (202) 557-2747.