Comptroller of the Currency and FDIC announce proposed changes to Community Reinvestment Act regulations
33 min read
As in the case of the recission of the Interagency Guidance on Leveraged Lending in December 2025, the Comptroller of the Currency and the FDIC take the lead in proposing deregulatory changes in a politically sensitive regulatory area, but the Federal Reserve Board – which has the same regulations – has not joined the proposal.
Introduction
On July 31, 2026, the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC," and together with the OCC, the "Agencies") issued a joint notice of proposed rulemaking1 ("Proposal") to amend the Agencies' regulations under the Community Reinvestment Act ("CRA"), which is a 1977 federal banking statute that requires FDIC-insured depository institutions to help meet the credit needs of the communities in which they operate.
As described in the Agencies' joint news release, the Proposal would retain the key elements of the regulatory framework that the Agencies have generally applied since 1995 and make "targeted changes" to those regulations "to better align with the statutory mandate,; better ensure that community development grants reach the communities they are intended to benefit;, reduce burden for banks, particularly for community banks,; and provide greater clarity for how to obtain CRA consideration."2 The Proposal would also reduce the administrative and compliance burdens on banks with $10 billion or less in assets, with those banks also receiving "more flexible supervision."3 The Agencies also note that the Proposal "would streamline other requirements and increase the clarity, transparency, and objectivity associated with CRA evaluations for banks of all sizes."4
The Proposal would also make certain changes that would address concerns that the CRA evaluation process is overly politicized. In that regard, the Agencies explained in the joint news release that the Proposal seeks "to increase the focus on lending and ensure that community development grants and donations reach the communities they are intended to benefit instead of being diverted to other activities or excessive operating costs."5 Other changes to the Agencies' current CRA regulations that would be made by the Proposal include "narrow[ing] the range of retail banking services the agencies consider to focus on credit services, thereby excluding deposit services."6
The Proposal marks the latest step in a fairly long history of amendments and proposed amendments to the CRA regulations and, if adopted, would eliminate some uncertainty currently affecting the regulations that arose in connection with a court ruling that enjoined the amendments to the CRA regulations that were adopted by the Agencies and the Federal Reserve Board in 2023.7 The Proposal is perhaps most noteworthy, however, as an attempt by Republican-appointed leaders at the Agencies to refocus regulatory evaluations of banks' CRA performance on lending activities and to prevent activist community advocacy groups and similar organizations from being able to use the CRA process to obtain major donations from banks that are seeking regulatory approval for expansion proposals.
Although it is customary for all three of the federal bank regulatory agencies – the Federal Reserve Board, the OCC and the FDIC – to act jointly in issuing proposed amendments to regulations that each of the agencies have issued in substantially identical form, the issuance of the Proposal by only the OCC and the FDIC follows the same approach as was taken by those two agencies in December of 2025 in formally withdrawing from the "Interagency Guidance on Leveraged Lending" dated March 21, 2013 and the "Frequently Asked Questions for Implementing March 2013 Interagency Guidance on Leveraged Lending" dated November 7, 2014.8 A pattern has developed in which the OCC and the FDIC, under the leadership of Republican appointees, are taking action on the regulatory policy initiatives of the current U.S. Administration on their own without the Federal Reserve Board, which is led by a seven member Board of Governors on which there are both Republican and Democratic appointees.9 Although both the Chair of the Federal Reserve Board (Kevin Warsh) and the Vice Chair for Supervision (Michelle Bowman) are Republican appointees, the decision apparently made by Federal Reserve Board leadership not to join the Proposal may reflect the difficulties in obtaining majority support on the Board of Governors for regulatory initiatives that have a political dimension, as well as greater independence at the Federal Reserve Board from the policy initiatives of the Administration or different priorities for regulatory policy.
The U.S. banking industry would become subject to a bifurcated regulatory regime under the CRA if the Proposal is adopted in final form by the OCC and the FDIC (subject to any changes that those agencies may make in response to public comments that they receive) and the Federal Reserve Board has not at that time adopted comparable regulations of its own. State-chartered banks that are members of the Federal Reserve System would be subject to regulatory requirements and obligations under the CRA based upon regulations that predate the Proposal and that differ in significant respects from, and that impose somewhat greater regulatory burden than, those that would then be applicable to the depository institutions supervised by the OCC (national banks and federal savings associations) and by the FDIC (insured state nonmember banks and state savings associations).10
Public comments on the Proposal must be submitted on or before October 13, 2026.
Background on the CRA
The stated purpose of the CRA "is to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions."11
To achieve this purpose, the statute requires each federal financial supervisory agency, in connection with a CRA compliance examination of a financial institution, to "assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, consistent with the safe and sound operation of such institution." The statute further provides that the federal financial supervisory agency must take such record into account in the agency's evaluation of an application by the financial institution for a "deposit facility."13 As defined in the CRA and as applied in the federal financial supervisory agencies' implementing regulations, the phrase "application for a deposit facility" includes an application for (among other things) –
(a) a national bank or federal savings and loan association charter;
(b) deposit insurance in connection with a newly-chartered State bank, savings bank, savings and loan association or similar institution;
(c) the establishment of a deposit-taking branch or the relocation of the main office or a branch office of the institution;
(d) a merger or consolidation with, or acquisition of the assets or assumption of the liabilities of, an FDIC-insured depository institution requiring regulatory approval under the Bank Merger Act or the Home Owners' Loan Act; or
(e) an acquisition of an FDIC-insured depository institution requiring regulatory approval under the Bank Holding Company Act or the Home Owners' Loan Act, or similar acquisition, merger or holding company formation transactions involving bank holding companies or savings and loan holding companies.14
The compliance by banks and savings associations with their obligations under the CRA are rated on a scale ranging from "outstanding," "satisfactory," "needs to improve" and "substantial noncompliance."15 A low CRA compliance rating can lead to the bank or savings association's federal financial supervisory agency denying an application by the institution for a deposit facility.
History of Attempted Revisions to the CRA Regulations
The CRA has historically been the subject of partisan division, including among the political appointees in the leadership of the federal financial supervisory agencies.16 That has resulted in a number of attempts in recent years by those agencies – following the appointment of new agency leadership by an incoming U.S. administration -- to amend the CRA regulations in ways that respond to or support the policy concerns of the political party then in power.
In recent years, for example, there was an attempt to amend and update the CRA regulations during the first Trump administration, with the OCC issuing a final rulemaking in May 2020 (the "2020 Rule")17 that was intended to advance regulatory transparency and certain deregulatory objectives.
That attempt at amending the CRA regulations ultimately failed, however, because the FDIC and the Federal Reserve Board did not join the rulemaking issued by the OCC. After the change in Presidential administrations, the OCC's newly-appointed leadership rescinded the 2020 Rule and committed to working with the FDIC and the Federal Reserve Board to put forth a joint rulemaking to update the regulations.18
The three regulatory agencies then issued a joint final rulemaking in October 2023 (the "2023 Rule") to amend and update the CRA regulations in a manner generally consistent with the policy objectives of the Biden administration,19 over the objections of some Republican-appointed members of the agencies' leadership20 and subject to a legal challenge by several banking industry trade associations.
That effort also proved to be a short-lived regulatory achievement, with a federal district court in March 2024 issuing a preliminary injunction with respect to the 2023 Rule in response to the litigation brought by the trade associations, with the court concluding that the 2023 Rule exceeded the statutory authority of the agencies in expanding financial institutions' CRA assessment areas to include geographies in which the institution may not have a physical presence and by including financial institutions' deposit products in CRA assessments rather than only credit services.21 The court also concluded that the fact that legislative amendments of the CRA had previously been proposed – but not enacted into law – that would have shifted CRA assessment areas from areas surrounding deposit-taking facilities to areas where banks make loans provided "a powerful basis for applying the Major Questions Doctrine in favor of Plaintiffs."22
Following the changes in the leadership at the OCC, the FDIC and the Federal Reserve Board that resulted from the 2024 Presidential election, those agencies jointly issued a proposal in July of 2025 to rescind the 2023 Rule and replace it with the CRA regulations that were originally adopted by the three regulatory agencies in 1995 (the "1995 Regulations"), with certain technical amendments.23 The regulatory agencies explained that because the 2023 Rule was subject to legal action and had not taken effect, the agencies were continuing to apply the 1995 Regulations at that time, and that the rescission of the 2023 Rule would restore certainty in the CRA framework and limit regulatory burden on banks.24
As explained in the Proposal, the OCC and the FDIC ultimately determined – in response to public feedback and other factors – not to finalize the proposal to rescind the 2023 Rule, and instead proceeded to issue the Proposal. The OCC and the FDIC also dismissed their appeal of the federal district court's injunction against the 2023 Rule. As noted above, the Federal Reserve Board has not joined the OCC and the FDIC on the Proposal, and it also did not join the motion by the other regulatory agencies to dismiss the appeal of the injunction against the 2023 Rule. However, it has been reported that the Federal Reserve Board has indicated in court filings that it intends to proceed with finalizing the proposal to rescind the 2023 Rule and to revert to its 1995 CRA regulations.25
Key Deregulatory Aspects of the Proposal
As noted above, the Proposal would retain the key elements of the 1995 Regulations while making "targeted changes" to "to better align with the statutory mandate" and accomplish certain other policy objectives. The following is a brief overview of the 1995 Regulations as well as a discussion of certain of the key aspects of the Proposal that would advance or support regulatory transparency and other deregulatory objectives.
Overview of 1995 Regulations26
The 1995 Regulations provide for a performance-based evaluation process to assess whether financial institutions27 are meeting the credit needs of their communities, including LMI neighborhoods, including requiring different tests for large and small institutions as well as for retail and wholesale or limited purpose banks.28
The 1995 Regulations require a financial institution to delineate one or more assessment areas in which its federal financial supervisory agency evaluates its CRA record, with the assessment area being required to include the census tracts in which the bank's main office, branches, and deposit-taking automated teller machines are located, as well as the surrounding census tracts where a substantial portion of the institution's loans are originated or purchased.
The 1995 Regulations also afford financial institutions the option of being evaluated on the basis of a "strategic plan" designed by the institution and approved by its federal financial supervisory agency. Other aspects of the 1995 Regulations include (among other things) data collection, maintenance, and disclosure requirements for financial institutions,29 the public's right to access information about how a bank financial institution meets the credit needs of its community, and the effect of a CRA performance rating on certain regulatory applications.30
Deregulatory Aspects of the Proposal
As noted above, the Proposal would retain the key elements of the 1995 Regulations and make "targeted changes" to accomplish specific deregulatory and related objectives, including to better align the 1995 Regulations with the statute and to increase the clarity, transparency, and objectivity associated with regulatory assessments of banks' CRA performance.
The following are some of the major deregulatory changes that would be made to the Regulations by the Proposal.
Revised Bank Size Categories
The Proposal would adjust the size categories for banks that are subject to the CRA, which if adopted would substantially reduce the compliance burden for smaller and mid-size institutions. Specifically, the Proposal would define "small bank" as a bank with less than $1 billion in total assets as of the end of either of the two prior calendar years, reflecting an increase from the current small bank asset threshold of less than $412 million. That new asset size threshold, which would be subject to annual adjustments for inflation, would increase the percentage of banks that qualify as small banks to approximately 80% of all banks that are subject to the CRA.
Additionally, the Proposal would replace the current size category for "intermediate small banks" with a new category for "intermediate banks," which as proposed would cover banks with assets between $1 billion and $10 billion as of the end of either of the two prior calendar years.31 The Proposal notes that based on bank call report data for year-end 2024 and year-end 2025, approximately 636 out of the approximately 3,577 banks that are subject to the CRA would have qualified as intermediate banks. A bank would be classified as a "large bank" if it had assets of more than $10 billion as of the end of either of the two prior calendar years, reflecting a substantial increase from the $1.649 billion threshold currently in effect. The Proposal notes that based on the 2024 and 2025 year-end call report data, only 2.4 % of banks (86 banks) would have been large banks under this revised asset size threshold.
The Proposal explains that these changes in the asset size categories "would reduce the associated data collection, maintenance, and reporting requirements for many smaller banks and would subject smaller banks to performance standards with greater flexibility, which the agencies expect would enable these banks to meet the credit needs of their communities without the burden of regulatory requirements that have not kept pace with changes in the banking industry." A substantial number of banks that are currently treated as large banks for CRA purposes would be reclassified as intermediate banks and, along with small banks, would not be covered by CRA compliance requirements and performance assessment standards that apply only to large banks – specifically, the investment and service tests that apply to large banks for the assessment of CRA performance32 or the large bank data collection, maintenance and reporting requirements in the 1995 Regulations. These changes would reduce or eliminate at least some CRA compliance and administrative burdens for a large number of banks.
Changes in Bank Products and Services Subject to CRA Performance Assessment
In keeping with the CRA's statutory mandate focusing on banks meeting the credit needs of their local communities, the Proposal would narrow the range of bank services that are considered to be "retail banking services"33 for purposes of the service test under which large banks are assessed for CRA performance to focus only on credit services, thereby excluding the bank deposit services that have previously been considered for purposes of the service test.
Additionally, for purposes of the lending tests that apply to all categories of banks, the Proposal provides that that Agencies would consider only a bank's major product line(s) when assessing the bank's retail lending (i.e., consumer, home mortgage, small business, and small farm loans). The Agencies explain in the Proposal that this change "would reduce regulatory burden for banks by tailoring the lending test to focus on the product lines that make up most of a bank's record of serving community credit needs, thus enabling banks to better focus their resources to more effectively manage their CRA programs."
Revised Criteria for Banks' Community Development Grants
Under the 1995 Regulations, a bank can receive CRA consideration for a grant or donation to a non-profit or similar organization where the primary purpose of the grant or donation is community development, which makes the grant or donation a "qualified investment" under those Regulations. The Agencies note in the Proposal that although grants and donations are included in the definition of "qualified investment," they differ from other types of qualified investments that involve more structured financing and are more akin to lending, such as securities that are the functional equivalent of a loan, or securities backed by loans, bonds, and other equity investments.
This flexible treatment of bank grants and donations to third parties for purposes of obtaining CRA consideration has led to a practice in which – in the view of many critics – banks have sometimes deemed it necessary to make large donations to community reinvestment and other advocacy organizations in order to obtain such organizations' endorsement of the bank's CRA performance as part of the regulatory approval process for a bank's application for a major acquisition or other major expansion.34 As noted above, under the CRA and the 1995 Regulations, a bank's CRA performance may be the basis for the bank's federal financial supervisory agency denying or conditioning approval of a regulatory application, such as for a merger of acquisition, for deposit insurance or a charter, or for other types of proposed expansions.
As explained by Comptroller of the Currency Jonathan Gould and FDIC Chairman Travis Hill in recent press interviews, the Proposal's planned revisions to the criteria for banks' community development grants are intended by the Agencies to "stop major banks from buying regulatory favor through donations to progressive activist nonprofits"35 and "direct money away from organizations in Washington" that often serve as funding intermediaries36 and instead "ensure that more money goes to the low- to moderate-income communities the [CRA] is supposed to benefit."37
To accomplish this objective, the Proposal would add a new definition of "community development grant" to the Agencies' CRA regulations, under which bank grants and donations could be considered for CRA credit only where the bank is able to demonstrate that the funds will be "directly used by the recipient" for a program, project, or initiative that has as its primary purpose community development. For large banks, the proposed rules would further require that the grant or donation be directed to a recipient whose indirect costs for administering the grant or donation would not exceed 15% of the proceeds.38 The Proposal cites as an example a bank that recently received CRA consideration for a grant to a community development organization engaged in directly providing homeownership counseling to LMI individuals and health care services to individuals experiencing homelessness, where approximately 25% of the grant was reported to be used for the organization's internal expenses. The Proposal states that under the proposed new criteria, this grant would not qualify as a community development grant for a large bank due to the recipient using over 15% of its proceeds for indirect expenses.
In connection with the new criteria for grants or donations by large banks, the Proposal includes a requirement that such a bank obtain and maintain the grant recipient's written commitment to use the funds for specific programs, projects, or initiatives in the bank's assessment area and the recipient's written attestation that the recipient's indirect costs for administering the grant or donation will not exceed 15%, as well as other supporting documentation.
Other Proposed Changes
Some of the other changes to the 1995 Regulations that would be made by the Proposal in order to reduce regulatory burden or increase transparency and clarity for bank CRA compliance obligations include revisions to make the CRA strategic plan option a more viable and less burdensome option for banks as well as clarifications of the standards for bank community development activities to make clear when loans, investments, grants, and services would qualify as community development activities for CRA performance assessment purposes.
Regarding strategic plans, the changes that would be made by the Proposal, if adopted, would clarify how banks would submit, amend, and implement their strategic plans, as well as provide additional information regarding a plan's contents, particularly the measurable goals. Under the revised procedures, a bank could submit a draft strategic plan to its Federal financial supervisory agency for review and feedback, with the agency being required to notify the bank in writing whether the plan satisfied the regulatory requirements to be considered "technically complete."
Regarding the standards for bank community development activities, the Proposal would codify a process drawn from the OCC's 2020 Rule under which a bank could seek confirmation from its Federal financial supervisory agency that a specific planned community development activity (i.e., a loan, investment, grant, or service with a primary purpose of community development) would receive CRA consideration. The Proposal would also codify the existence of a publicly available non-exhaustive, illustrative list of examples of community development activities, the publication of which the Agencies believe would reduce uncertainty regarding what qualifies for community development consideration and give banks greater ability to manage their CRA programs. The Agencies have reportedly been in the process of developing that list of community development activities. 39
Observations on the Likely Impact of the Deregulatory Actions included in the Proposal
Although the proposed increases in bank asset size thresholds for purposes of CRA compliance obligations and performance assessment standards, if adopted, seem likely to have the greatest deregulatory effect for the banking industry, it is the proposed changes in the regulatory standards for banks' community development grants that seem to have attracted the most attention and political commentary.
Given the partisan divide relating to the CRA, with community and advocacy organizations as well as Democratic members of Congress viewing the statute as an important piece of civil rights legislation that is essential to preventing redlining and boosting bank lending to LMI communities, the OCC and the FDIC can expect to receive strongly negative public comment and other pushback on at least some aspects of the Proposal.40
The leadership of the National Community Reinvestment Coalition ("NCRC"), which is a large nationwide network of community development and finance, community organizing and civil rights, and other organizations, has already given a preview of its opposition to the proposed changes in the regulatory standards for banks' community development grants. As noted above, the Comptroller and the FDIC Chairman have stated that the changes to the standards for community development grants are intended to "direct money away from organizations in Washington" that often serve as funding intermediaries41 and instead "ensure that more money goes to the low- to moderate-income communities the [CRA] is supposed to benefit." The NCRC has stated that this aspect of the Proposal creates the appearance that the agencies "on a political basis" are targeting organizations that advocate against administration policies," which the Comptroller and the FDIC Chairman deny.42 The NCRC has also claimed that the Proposal "may result in less money going to the small community groups the agencies say they're trying to benefit," as many of the smallest community development groups have relatively high overhead costs that would make it difficult for them to partner with banks directly on community reinvestment.43
The NCRC has also claimed that the approach taken in the Proposal of reducing the CRA compliance obligations of smaller and midsize banks would reduce the amount of bank capital put into affordable housing creation, which threatens to undermine other affordable housing measures that are in place and "further deepen our housing crisis."44
Additionally, given the recent history of amendments and attempted amendments to the CRA regulations that have occurred following each change in U.S. Administrations, it seems likely that if there is a Democratic Administration following the 2028 elections, the leaders of the OCC and the FDIC who would then be appointed would seek to rescind any final regulations that would have been adopted by the Agencies on the basis of the Proposal and replace them with regulations that more closely reflect Democratic policy objectives for the CRA and bank compliance obligations under that statute.
1 OCC and FDIC, Community Reinvestment Act Regulations, 91 Fed. Reg. 52114 (Aug. 12, 2026).
2 Joint OCC and FDIC Release, Agencies Issue Joint Proposal Amending the Community Reinvestment Act Rules
(July 31, 2026), https://www.fdic.gov/news/press-releases/2026/agencies-issue-joint-proposal-amending-community-reinvestment-act-rules.
3 Id.
4 Id.
5 Id.
6 Id.
7 OCC, Federal Reserve Board and FDIC, Community Reinvestment Act, 89 Fed. Reg. 6574 (Feb. 1, 2024).
8 See White & Case Alert, "Comptroller of the Currency and FDIC withdraw from Interagency Leveraged Lending Guidance" (Dec. 18, 2025), https://www.whitecase.com/insight-alert/comptroller-currency-and-fdic-withdraw-interagency-leveraged-lending-guidance.
9 In another recent rulemaking action, on August 27, 2026, the OCC and the FDIC issued a joint final rule to prioritize material financial risk over concerns related to policies, process, documentation, and other nonfinancial risks for purposes of the Agencies' supervision and enforcement framework and standards. OCC and FDIC, Unsafe or Unsound Practices, Matters Requiring Attention, 91 Fed. Reg. 56004 (Sept. 1, 2026). It has been reported that the Agencies, in taking that action, were seeking to eliminate what they refer to as "virtue signaling" from regulatory oversight practices and to address the Trump Administration's policy goals of removing political issues such as climate change and diversity, equity and inclusion as a focus for the federal bank regulatory agencies. See Bloomberg Law, "Top Bank Watchdogs Adopt Plan to Narrow Oversight to Core Risks" (Aug. 27, 2026), https://www.bloomberg.com/news/articles/2026-08-27/top-bank-watchdogs-adopt-plan-to-refocus-oversight-on-core-risks. The Agencies' joint final rule defines the term "unsafe or unsound practice" as a practice, act, or failure to act, alone or together with one or more other practices, acts, or failures to act, that (1) is contrary to generally accepted standards of prudent operation, and (2) (i) if continued, is likely to (A) materially harm the financial condition of the institution, or (B) present a material risk of loss to the Deposit Insurance Fund, or (ii) materially harmed the financial condition of the institution. The joint final rule further provides that the Agencies may only issue a "matter requiring attention" (an "MRA") to a bank's management or board of directors to require a change in the bank's practices or remediation of a violation in connection with a material financial risk or an "actual violation" of a banking or banking-related law or regulation. The joint final rule also specifies that the Agencies may communicate to banks "other violations" (i.e., actual violations of a banking or banking-related law or regulation for which the relevant agency does not take an enforcement action or issue an MRA and as to which the agency may require the bank to take remedial or other actions as required by law) as well as informal "supervisory observations" (i.e., an informal observation that does not rise to the level of an MRA which identifies weaknesses in the bank's policies, practices, condition, or operations but does not create a requirement or supervisory expectation that the matter be presented to the bank's board of directors or that the bank take corrective action).
10 As used in this Alert, the term "bank" includes a savings association unless the context otherwise requires.
11 12 U.S.C. § 2901(b). The term "appropriate Federal financial supervisory agency" is defined in the CRA to mean (a) the OCC with respect to FDIC-insured national banks and Federal savings associations, (b) the Federal Reserve Board with respect to State-chartered banks that are members of the Federal Reserve System, bank holding companies, and savings and loan holding companies, and (c) the FDIC with respect to FDIC-insured State-chartered banks and savings banks that are not members of the Federal Reserve System and FDIC-insured State savings associations. 12 U.S.C. § 2902(1).
12 12 U.S.C. § 2903(a)(1).
13 12 U.S.C. § 2903(a)(2).
14 12 U.S.C. § 2902(3); 12 C.F.R. §§ 25.31(a), 228.11(a)(3), 345.31(a).
15 FDIC, Bank Examinations – Composite Ratings Definitions List, https://www.fdic.gov/bank-examinations/composite-ratings-definition-list.
16 See Michael S. Barr, "Credit Where it Counts: The Community Reinvestment Act and its Critics," 80 N.Y.U. L. Rev. 513 (2005) ("CRA has been since its enactment, and remains today, the subject of extensive debate. The contentiousness of the policy is reflected in the uncharacteristic drama that accompanies proposed policy changes.... At bottom, debate over these kinds of changes revolves around competing views of the underlying purposes of CRA, the need for government intervention in credit markets, and the costs and benefits of such policies." (citations omitted)). In general, community reinvestment organizations as well as Democratic administrations and Democratic-appointed agency leadership have traditionally viewed the CRA as an important piece of civil rights legislation that is essential to preventing redlining and boosting bank lending to LMI communities. See generally, National Endowment for Financial Education, "Community Reinvestment Act Reforms: A Powerful Tool Against Racial Discrimination in Finance," https://www.nefe.org/news/2023/10/community-reinvestment-act-reforms.aspx. In contrast, as evidenced by the statements by OCC and FDIC leadership relating to the Proposal, Republican administrations and Republican-appointed agency leadership have tended to regard the CRA, at least as implemented to date, as being susceptible to regulatory overreach and political considerations and as overly burdensome to smaller banks. Additionally, as noted below, banking industry trade associations have also taken an active role in pushing back against some regulatory attempts to expand the scope of the implementing regulations beyond the original statutory mandate.
17 See OCC News Release 2020-63 – OCC Finalizes Rule to Strengthen and Modernize Community Reinvestment Act Regulations (May 20, 2020), https://occ.gov/news-issuances/news-releases/2020/nr-occ-2020-63.html; OCC, Community Reinvestment Act Regulations, 85 Fed. Reg. 34734 (June 5, 2020). As explained in the OCC's final rulemaking release and related OCC statements, the primary objectives of those revised rules were to (i) clarify and expand the bank lending, investment, and services that qualify for positive CRA consideration in order to incentivizes banks to achieve specific performance goals, (ii) update how banks delineate the assessment areas in which their CRA performance is evaluated, (iii) evaluate CRA performance more objectively through quantitative measures that assess the volume and value of activity, and (iv) require reporting by banks on their CRA activities that is timely and transparent.
18 OCC News Release 2021-76 -- OCC Statement on Rescinding its 2020 Community Reinvestment Act Rule (July 20, 2021), https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-76.html.
19 See OCC Bulletin 2023-32, Community Reinvestment Act: Interagency Final Rulemaking to Implement the CRA (Oct. 24, 2023), https://occ.gov/news-issuances/bulletins/2023/bulletin-2023-32.html; OCC, Federal Reserve Board and FDIC, Community Reinvestment Act, 89 Fed. Reg. 6574 (Feb. 1, 2024). A key aspect of the 2023 rulemaking was the modernization of the CRA regulations to allow for supervisory evaluation of a bank's retail lending activities to include lending outside of the areas in which the bank had brick-and-mortar offices, such as online lending and mobile banking services. Other changes included, among other things, the adoption of new performance tests for evaluating the CRA performance of large banks and intermediate banks, updating the data collection, maintenance, and reporting requirements for large banks, providing a process by which banks could request confirmation that an activity was eligible for community development consideration, and providing for a publicly available interagency illustrative list of qualifying community development activities.
20 The 2023 rulemaking was criticized for exceeding the authority of the federal financial supervisory agencies in updating the CRA regulatory regime to allow for supervisory evaluation of bank CRA performance outside of a bank's deposit-taking footprint without Congressional authorization. Additionally, the 2023 rulemaking's updating of the regulations' asset size thresholds for tailoring of the compliance obligations and supervisory evaluation of small, medium and large banks was criticized as providing for unrealistically low thresholds and, as a result, imposing overly burdensome CRA performance and compliance obligations on smaller institutions. See Statement on the Community Reinvestment Act Final Rule by Federal Reserve Board Governor Michelle W. Bowman (Oct. 24, 2023) ("[T]he final rule essentially applies the same evaluation for a $2 billion bank as it does for a $2 trillion bank. The lack of recognition that these banks are fundamentally different, with different balance sheets and business models, misses an important opportunity to appropriately tailor CRA expectations to a bank's size, risk, service area, and business model.") Governor Bowman also stated that "[T]he final rule is unnecessarily complex, overly prescriptive, and contains disproportionately greater costs than benefits, adding significantly greater regulatory burden for all banks, but especially for community banks. The premise of the changes being made in this rule is that banks are not doing enough to meet the credit needs of their communities. Yet, there is no evidence provided to support this premise.").
21 Texas Bankers Association, et al. v. Office of the Comptroller, et al., 728 F. Supp. 3d 412 (N.D. Tex. 2024).
22 Id.
23 See OCC News Release 2025-71, Agencies Issue Joint Proposal to Rescind 2023 Community Reinvestment Act Final Rule (July 16, 2025), https://occ.gov/news-issuances/news-releases/2025/nr-ia-2025-71.html; OCC, Federal Reserve Board and FDIC, Community Reinvestment Act Regulations, 90 Fed. Reg. 34086 (July 18, 2025).
24 OCC News Release 2025-71, supra.
25 Bank Policy Institute, BPInsights -- OCC and FDIC Propose New Community Reinvestment Act Framework (August 1, 2026), https://bpi.com/bpinsights-august-1-2026/.
26 The 1995 Regulations are supplemented by guidance issued by the federal financial supervisory agencies in their Interagency Questions and Answers Regarding Community Reinvestment, available at https://www.govinfo.gov/content/pkg/FR-2016-07-25/pdf/2016-16693.pdf.
27 Large banks– i.e., those with assets that exceed the small bank asset size threshold of $1.649 billion – are evaluated for CRA performance under separate lending, investment and service tests, with the lending and service tests considering both retail and community development activities and the investment test focusing on qualified investments. Small banks are evaluated only under a lending test, although a subset of small banks ("intermediate small banks" with assets of at least $412 million) are also evaluated under a community development test. The retail activities that are considered in CRA performance evaluations are (i) consumer, home mortgage, small business, and small farm lending, as applicable, and (ii) retail banking services and delivery systems. The 1995 Regulations also consider as community development activities a bank's loans, investments, and services that have a primary purpose of community development, which is defined in the regulations to mean (a) affordable housing, (b) community services targeted to LMI individuals, (c) economic development that finances small businesses and small farms, and (d) activities that revitalize or stabilize LMI geographies, designated disaster areas, and distressed or underserved nonmetropolitan middle-income geographies. "Qualified investments" are defined to include investments, grants, deposits, and membership shares the primary purpose of which is community development. Community development "services" are generally volunteer services provided by a bank that, in addition to having a primary purpose of community development, also are related to the provision of financial services.
28 A bank that has been designated by its federal financial supervisory agency as a "wholesale bank" (i.e., a bank that is not in the business of extending retail loans to retail customers) or a "limited purpose bank" (i.e., a bank that offers only a narrow product line to a regional or broader market) is evaluated under a standalone community development test.
29 Under the 1995 Regulations, a large bank is required to collect, maintain, and report annually certain data on community development loans, small business loans, and small farm loans as well as to report annually the census tracts included in its assessment area(s). In contrast, small banks, including intermediate small banks, are not required to report such information unless they opt to be evaluated under the large bank lending test.
30 Under the 1995 Regulations, a bank's CRA performance may be the basis for the bank's federal financial supervisory agency denying or conditioning approval of a regulatory application, such as for a merger of acquisition, for deposit insurance or a charter, or for other types of proposed expansions identified in the Regulations.
31 The Proposal notes that the Agencies are also considering other alternative asset size thresholds for the new intermediate bank category, including whether the intermediate bank category should be expanded to include banks with less than $30 billion in assets.
32 An intermediate bank would be subject to a tailored community development test, however, as has generally been the case for intermediate small banks under the 1995 Regulations.
33 Under the 1995 Regulations, "retail banking services" are retail financial services provided by a bank to consumers, small businesses, or small farms, including an institution's systems for delivering retail financial services.
34 Press reports regarding this aspect of the Proposal have noted that "Critics contend banks have long boosted their ratings by donating to advocacy groups that endorse them to regulators. They claim left-leaning nonprofits use the threat of regulatory protests to strong-arm merging banks into signing massive community benefits agreements."
N.Y. Post, "Trump regulators vow to end left-wing 'shakedown' of US banks" (July 31, 2026), https://nypost.com/2026/07/31/business/trump-regulators-vow-to-end-left-wing-shakedown-of-us-banks/.
35 Id.
36 Bloomberg Law, "Anti-Redlining Plan Aims to Bypass DC Groups, FDIC Chief Says" (August 25, 2026), https://news.bloomberglaw.com/banking-law/anti-redlining-plan-aims-to-bypass-dc-groups-fdic-chief-says.
37 Id.
38 The Proposal explains in this regard that "In the agencies' experience, inefficient use of funds is most common in grants and donations, particularly because middlemen are more frequently relied upon to indirectly deploy funds. This results in increased indirect costs and less funds directly serving LMI individuals, LMI census tracts, small businesses, and small farms."
39 Bloomberg Law, "Trump to Use Anti-Redlining Law to Target `Activist' Groups" (July 31, 2016), https://news.bloomberglaw.com/banking-law/trump-to-use-anti-redlining-law-to-target-activist-groups.
40 It has been reported that senior officials in the U.S. Administration have predicted that opponents of the approach taken in the Proposal, especially Democrat-controlled states, would file "spurious" court challenges to block the proposed changes. Id. Additionally, Democratic Senators on the Senate Banking, Housing, and Urban Affairs Committee issued a joint statement upon the issuance of the Proposal that "the Trump Administration is trying to gut another critical tool for building more housing, driving investment into communities, and combatting redlining" and that the Proposal "would make America's housing crisis worse." Banking Democrats Statement on Trump Administration Move to Gut Community Reinvestment Act (July 31, 2026), https://www.banking.senate.gov/newsroom/minority/banking-democrats-statement-on-trump-administration-move-to-gut-community-reinvestment-act.
41 Bloomberg Law, "Anti-Redlining Plan Aims to Bypass DC Groups, FDIC Chief Says," supra.
42 Id.
42 Id.
44 Banking Dive, "OCC, FDIC propose another CRA revamp" (Aug. 3, 2026), https://www.bankingdive.com/news/cra-update-occ-fdic-no-fed-anti-redlining/826847/.
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