Influencing policy: Standing up for community banks & consumers in Washington
ICBA Expert Contact
Ensure a Level Playing Field
ICBA advocates for CRA policies that recognize the unique role of community banks in serving local communities while ensuring regulations remain practical, transparent, and proportionate. ICBA works to preserve CRA’s core mission while opposing unnecessary complexity that burdens institutions without improving outcomes.
Support a Practical, Transparent Framework
ICBA supports consistent and transparent implementation of the Community Reinvestment Act that reflects how community banks serve their customers. Community banks are best positioned to understand local needs and should be empowered to demonstrate their impact in a clear, straightforward manner.
Preserve an Effective CRA Foundation
ICBA supports rescinding the 2023 CRA final rule and returning to the 1995 framework, which better aligns with community bank operations. The 2023 rule would have increased regulatory complexity, added costly new requirements, and failed to improve how community impact is measured.
Advance Targeted Modernization
While opposing a full rewrite, ICBA supports practical updates that improve clarity and effectiveness, including:
-
Higher asset thresholds to better reflect bank size and capacity.
-
A clear list of qualifying activities with a preapproval process.
-
Expanded recognition for partnerships, including allowing minority depository institutions (MDIs) to receive CRA credit for supporting other MDIs.
Ensure Proportionate Regulation
ICBA urges regulators to better differentiate between community banks and the largest institutions. Treating all banks above $1.609 billion in assets as “large banks” fails to account for meaningful differences in business models, resources, and community focus.
Maintain Local Assessment Authority
Community banks should retain the ability to define their own assessment areas based on where they operate and serve customers. Expanding evaluation beyond a bank’s physical presence risks misrepresenting its true community impact.
Recognize and Support Mission-Focused Institutions
ICBA supports streamlined CRA exams for minority- and women-owned financial institutions and Treasury-certified community development financial institutions (CDFIs), including a presumed rating of “high satisfactory” to reflect their intrinsic community focus.
Promote a Level Playing Field
ICBA supports extending CRA-like expectations to all financial institutions serving consumers and small businesses, including credit unions, fintech firms, and other nonbank providers. These entities should be held to comparable standards with appropriate asset-size distinctions to ensure fairness across the financial system.
Policy Position and Background Information
-
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).
-
ICBA supports the Federal Reserve Board, OCC, and FDIC’s proposal to rescind the 2023 CRA final rule and return to the 1995 framework. The 2023 rule would have increased the complexity of CRA exams, raised compliance costs for community banks, and would not have resulted in a more accurate assessment of how well banks meet the credit needs of their communities.
-
While we do not support a total rewrite of CRA rules, some changes proposed in the 2023 rule would be beneficial and should be implemented. They include higher asset thresholds, a qualifying activities list and preapproval process for qualifying activities, and allowing Minority Depository Institutions (MDIs) to receive CRA credit for supporting other MDIs.
-
Regulators should do more to differentiate between larger community banks and the largest Too Big To Fail banks instead of grouping all banks over $1.609 billion in assets into the category of “large banks.”
-
Community banks know and understand their communities and are best positioned to define their assessment areas, not regulators.
-
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.
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.
We support recission of the 2023 CRA rule which was nearly 1,500 pages long and would have created complex new tests and required banks to delineate assessment areas in geographies where they did not have a physical presence. Returning to the 1995 framework will simplify compliance for community banks.
Some changes to the 1995 framework, including higher asset thresholds and greater clarity about what activities count for credit are appropriate, but the agencies should not seek to completely rewrite the rule or propose a new framework that requires community banks to be evaluated outside their branch footprint.
Regulatory Relief
Tiered regulation tailors supervisory requirements based on a bank’s size and risk profile, helping community banks operate efficiently without unnecessary burdens. Discover how this approach balances safety with flexibility in today’s regulatory environment.
Small Business Lending
ICBA opposes proposals to create an SBA 7(a) direct lending program. Such a program could undermine the existing successful public-private partnership SBA loan programs.
Compliance
Compliance touches every corner of community banking, from operations to customer interactions. Discover key areas like internal controls, policy development, and training programs that keep your bank aligned and accountable.