Bloomberg News
Federal regulators have changed their
The modification would give banks more time to prepare for changes under the updated framework. It also addresses oversights in the rule finalized last fall that would have subjected certain banks to broader assessment areas, only to have those requirements peeled back in 2026.
“This extension aligns these provisions with other substantive parts of the 2023 CRA final rule that are applicable on January 1, 2026,” the Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said in a statement. “For example, all provisions about where banks are evaluated will now apply on the same date.”
The agencies also delayed changed requirements related to public requirements and made several other “technical, non-substantive” changes to the rule. The interim final rule will go into effect on April 1, the original date of applicability under the rule, but the public will have 45 days to comment on the amendments.
Passed into law in 1977, the Community Reinvestment Act, or CRA, aimed to curb discriminatory practices and incentivize investment in underserved communities — largely those harmed by redlining practices that restricted credit availability to low-income and majority-minority neighborhoods. This is done by requiring banks to engage in a certain amount of reinvestment activity in areas around their branch locations.
Last year, the Fed, FDIC and OCC — which are tasked with monitoring CRA compliance among the banks they supervise —
Several banking groups are
Federal Reserve Gov. Michelle Bowman, who voted against the rule that finalized the CRA reforms in October, said the fact that regulators are making adjustments to the rule less than six months after approving it stands as proof that the changes were “rushed” and poorly executed.
“As I noted at that time, the CRA final rule is unnecessarily complex and extraordinarily lengthy,” Bowman said in a statement issued Thursday. “In my view, the appropriate approach to address the changes considered by these amendments, and the other more substantive issues with the final rule, would have been a re-proposal.”
The primary issue addressed by this week’s changes center on banks currently deemed “large.” The framework requires these banks to expand their assessment areas — geography that can reasonably be served by a bank’s branches, deposit-taking ATMs and main office — to include whole counties, rather than key parts, by April 1. But, the new framework also includes a change to which banks are deemed large, which goes into effect in 2026. Because of this, some banks would be categorized as “intermediate” and would again be able to have partial-county assessment areas.
The second change pushes back changes to the public disclosure portion of the framework, which requires banks to maintain a readily available file — either printed or digital — that lists bank’s branches, services and performance in helping meet community credit needs. Implementation of these changes would also be delayed until 2026.
The “technical” changes include clarifying the applicability date of public notice provisions, spell out inflation adjustments to asset-size thresholds, update cross-references in the framework, and various errors in the rule’s instructions.
Bowman said these changes are appropriate and will help avoid issues, but the amendments could be too little, too late.
“While the interim final rule is helpful in that it aligns the requirements for these banks to January 1, 2026, and gives other ‘large’ banks more time to comply with the requirement to redefine full county assessment areas, it is unrealistic to expect that banks have not already expended significant resources to comply with this new requirement,” she said. “Banks do not wait until a week before a new rule becomes effective to ensure that they are in compliance.”
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