ICBA said FDIC and OCC proposals to amend Community Reinvestment Act regulations are a positive step, but all federal regulators should harmonize CRA rulemaking.
Details: In a letter to the FDIC and OCC, ICBA said the agencies’ August proposals represent a meaningful step toward a CRA framework that is faithful to the statute, focused on lending, and proportionate in its demands on community banks.
ICBA Comments: ICBA said it:
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Strongly supports modernizing the asset thresholds, which would increase the proportionality of the rule, but urged the agencies to raise the small-bank threshold to $10 billion.
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Believes codifying an illustrative list of qualifying community development activities would replace decades of guesswork with transparency and give community banks the confidence to invest in worthwhile projects.
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Recommends that the final rule recognize mission-focused partners such as minority depository institutions, community development financial institutions, and mutual banks.
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Urges a de minimis exception, an exemption for small nonprofits, and an attestation safe harbor on the proposed 15% cap on recipients’ indirect costs.
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Supports the optional geographic flexibility framework and recommends a de minimis exception for modest activities outside assessment areas, confirmation that activities with minority- and women-owned institutions remain exempt from the standard, and comparable treatment for CDFI banks and mutual banks.
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Appreciates the redoubled focus on lending and narrowed consideration of lending products to only major product lines.
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Supports retaining an assessment area framework grounded in a bank’s physical presence, as the statute and the court in the CRA litigation require, and urges the agencies to codify that limit.
ICBA View: In a national news release following the release of the FDIC and OCC joint proposal, ICBA noted it has long supported modernizing CRA regulations and minimizing community bank regulatory burdens.
Rescission of 2023 Rule: The FDIC, OCC, and Federal Reserve last year issued a joint proposal to rescind the 2023 CRA rule, with the agencies applying the 1995 CRA regulations to banks. ICBA applauded the agencies’ previous announcement of the proposal, citing the rule’s disproportionate implementation costs for community banks.
CRA Litigation Update: Separately, the FDIC and OCC in August filed motions in ongoing litigation over regulators’ 2023 CRA rule, asking the court to declare that rule and 2016 CRA guidance unlawful, to impose limits on future CRA regulations related to deposit products and assessing retail lending activities outside the geographic areas served by physical banking offices, and to resolve their role in the litigation. The Fed’s role in the litigation is proceeding separately.
Background on ICBA Litigation: In 2024, ICBA and other groups filed an appellate brief with the Fifth Circuit challenging the 2023 CRA final rule, arguing it unlawfully evaluates banks’ performance nationwide, not within the bank’s “community.” In their original complaint, the groups asserted that regulators exceeded their statutory authority with the CRA final rule, violating the Administrative Procedure Act, and that the rule would limit future bank lending.
ICBA Advocacy: ICBA has long sought CRA reforms to recognize the disproportionate reporting burden on community banks, including last year calling on regulators to rescind the 2023 CRA rule and reinstate the prior version in a letter responding to the Office of Management and Budget’s request for information on deregulation.