On May 5, 2022, the Federal Reserve Board, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (together, the "Banking Agencies") issued a notice of proposed rulemaking (the "Proposal") that would amend the Banking Agencies' regulations implementing the Community Reinvestment Act of 1977, as amended (the "CRA").1

Pursuant to the CRA, covered banking institutions have a "continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered." To encourage banks to help meet the local communities' credit needs, the CRA requires that the Baking Agencies "examine the banks' records of meeting the credit needs of their entire community, including low- and moderate-income neighborhoods." With this objective in mind, the Proposal, the first significant interagency revisions since 1995, seeks to revise the CRA implementing regulations to account for changes in the banking industry, including the expanding role of mobile and online banking.

The Banking Agencies have identified the following as the five key elements and goals of the Proposal:

  • Expand access to credit, investment, and basic banking services in low- and moderate-income communities.
  • Adapt to changes in the banking industry (including online and mobile banking, branchless banking and hybrid models).
  • Provide greater clarity, consistency and transparency by adopting a metrics-based approach to CRA evaluations (including public benchmarks) and clarifying eligible CRA activities, among other measures.
  • Tailor CRA evaluations and data collection to bank size and type.
  • Maintain a unified approach from the Banking Agencies.

It is important to note that under the current CRA regulations and in the Proposal, CRA performance on these tests is an important factor considered by the Banking Agencies when they deliberate regarding applications including, mergers, deposit insurance, branch openings and relocations, conversions and acquisitions and other applications.

Below we provide a summary of the Proposal's key elements, which include: (1) changes to the asset threshold of the different bank categories; (2) changes to the activities that qualify for CRA credit; (3) new types of assessment areas that allow for increased flexibility in obtaining CRA credit; (4) revisions to the evaluative framework with respect to grading scale, size definitions, performance tests and strategic plan process; and (5) new data collection and reporting obligations. Comments on the Proposal are due by August 5, 2022.

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Footnote

1. Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, Community Reinvestment Act Joint Notice of Proposed Rulemaking, Federal Register Notice (May 5, 2022), available  here.

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