Our Position

Community Reinvestment Act (CRA)

Lawsuit Background

On February 5, 2024, ICBA and other groups filed a lawsuit against the federal banking regulators, challenging the agencies for exceeding their statutory authority with their recent Community Reinvestment Act final rule.

The complaint — which was filed in the Northern District of Texas with the Independent Bankers Association of Texas, Texas Bankers Association, Amarillo Chamber of Commerce, American Bankers Association, U.S. Chamber of Commerce, and Longview Chamber of Commerce — asks the court to vacate the final rule and seeks a preliminary injunction to pause it while the court decides the merits of our case.


About the Lawsuit

The complaint explains how the new rules will limit future bank lending. It also identifies how the regulatory agencies exceeded their statutory authority in violation of the Administrative Procedure Act by:

  • Evaluating bank lending well beyond banks’ deposit taking footprint, as required by CRA. The final rules will evaluate bank lending across the entire country, eliminating the statutory focus on a bank’s lending in its “local community.”

  • Evaluating institutions with more than $10 billion in assets for providing deposit products and services to low- and moderate-income consumers, even though the CRA only authorizes regulators to assess a bank’s record of meeting the credit needs of its local communities.

Litigation Contact (non-media)

Maria Amoruso

Jenna Burke
EVP, General Counsel, Government Relations & Public Policy, ICBA
[email protected].

Media Contact

Nicole Swann

Nicole Swann
VP, Communications, ICBA
[email protected]

Related Press Releases

ICBA Continues Call for Joint CRA Rulemaking

Feb. 16, 2021

Washington, D.C. (Feb. 16, 2021) — The Independent Community Bankers of America (ICBA) today reiterated its call for federal regulators to work together on updated Community Reinvestment Act regulations in a comment letter to the Federal Reserve.

"ICBA and the nation's community banks appreciate regulatory efforts to modernize the Community Reinvestment Act," ICBA President and CEO Rebeca Romero Rainey said today. "Because current regulations and approaches are outdated and can serve as barriers to implementing CRA’s very mission, we encourage banking regulators to work together on an interagency rule."

In its letter on a Fed advance notice of proposed rulemaking, ICBA urged the agency to work with the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. to issue a joint rule that:

  • Reflects technology-driven changes to the banking industry.
  • Recognizes the disproportionate burden of additional data collection and reporting on community banks.
  • Provides clarity on CRA ratings and definitions.
  • Strengthens incentives for partnerships with Minority Depository Institutions and Community Development Financial Institutions.
  • Includes a nationwide evaluation for internet banks.

ICBA looks forward to continuing to work with the agencies on CRA modernization.

 

About ICBA

The Independent Community Bankers of America creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, over $4.4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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Position

  • Community banks strongly support meeting the credit needs of their entire communities, including low and moderate-income areas. ICBA supports consistent and transparent implementation of the Community Reinvestment Act (CRA).
  • The Federal Reserve Board, OCC, and FDIC should modernize CRA jointly, resulting in a consistent, uniform rule for all banks.
  • The current asset thresholds defining “small,” “intermediate small,” and “large” banks should be increased to reflect the current banking environment.
  • Community banks know and understand their communities and are best positioned to define their assessment areas, not regulators.
  • Regulators should provide a non-exhaustive, illustrative list of activities that are presumed eligible for CRA credit.
  • Minority and women-owned financial institutions and Treasury-certified CDFIs should have a streamlined CRA exam, with a presumed rating of high satisfactory.
  • Credit unions, fintech companies, and any financial firm that serves consumers and small businesses should be subject to CRA in a manner comparable to, and with equivalent asset-size distinctions, as banks and thrifts.

Background

The CRA was enacted in 1977 to ensure that each insured depository institution serves the convenience and needs of its entire community, including low and moderate-income (“LMI”) neighborhoods, consistent with its safe and sound operation. This mission is the essence of what community banks do.

In 2022 the OCC, FDIC, and Federal Reserve Board published a notice of proposed rulemaking outlining a new CRA framework. We view some aspects of the proposal, including the increased asset thresholds, a qualifying activities list and confirmation process, and the ability of small banks to opt-in to the new framework or continue to be evaluated under their current framework as beneficial to community banks.

However, we are concerned that the complexity of the new tests, in particular the Retail Lending Test, may increase the cost of compliance and make it more difficult to attain “high satisfactory” or “outstanding” ratings. We are also concerned that Retail Lending Assessment Areas (“RLAAs”) may cause larger community banks to reduce lending away from their branches in order to avoid triggering the creation of RLAAs.

Staff Contact

Mickey Marshall

AVP, Regulatory Counsel

Email