A final rule was approved by the FDIC Board on October 24, 2023, which was issued in collaboration with the Federal Reserve and Office of the Comptroller of the Currency, modifying the FDIC’s regulation that implements the Community Reinvestment Act of 1977 (CRA) in a comprehensive manner.
The CRA regulations are updated by the final rule in order to accomplish the following major objectives:
As the banking sector evolves, adjust to new developments like online and mobile banking. With the development of non-branch delivery systems like online and mobile banking, branchless banking, and hybrid models, the final rule will update the CRA regulations for evaluating loans outside traditional assessment areas. A framework is provided for evaluating the digital delivery of banking products and services for certain banks under this final rule, while recognizing the importance of bank branches.
In the application of the CRA requirements, give more precision and consistency. To evaluate retail bank lending and community development financing using benchmarks based on peer data and demographic information, the final rule adopts a new metrics-based approach. Data tools will be developed by the agencies from reported loan data that provide banks and the public with additional insight into performance standards. A final rule clarifies what activities are eligible for CRAs, including affordable housing, that serve communities with low incomes, underserved areas, native communities, and rural communities.
Motivate banks to increase Low and Moderate Income (LMI) communities’ access to banking, investing, and credit services. CRA remains a powerful and effective tool to address inequities in access to credit and financial services as it continues to evaluate bank performance across the diverse activities they conduct and communities in which they operate. Among the final rules, minorities, tribal lands, rural areas, persistent poverty areas, and other high-need areas will benefit from the rule, which promotes financial inclusion through mutual assistance agreements between banks and Minority Depository Institutions and Community Development Financial Institutions.
CRA assessments and data gathering should be customized for each kind and size of bank. Differences in bank sizes and business styles are acknowledged in the final rule. Despite the option to be evaluated under the new framework, small banks will continue to be evaluated under the existing framework. In addition, certain new data requirements will not apply to small and intermediate banks with assets over $2 billion and will be limited to large banks with assets over $10 billion. The final rule also exempts small and intermediate banks from new data requirements.
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