Federal Agencies Unveil CRA Update to Aid Low-Income Areas, Washing…

Washington—Federal banking regulators today dropped a bombshell with the joint issuance of a sweeping proposal to modernize and strengthen Community Reinvestment Act (CRA) regulations. This landmark initiative, aimed at leveling the economic playing field for low- and moderate-income neighborhoods, comes as a direct response to feedback from stakeholders and research.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency have put forth a comprehensive plan that focuses on expanding access to credit and investment in these underserved communities. The proposal emphasizes smaller-value loans and investments with high impact.

Under this proposal, banks’ performance would be evaluated across various activities, ensuring CRA remains an effective tool against credit inequities. It also adapts to the digital banking revolution by updating CRA assessment areas to include online and mobile banking.

The initiative promises greater clarity and transparency with a metrics-based approach to evaluations of retail lending and community development financing. Eligible CRA activities such as affordable housing are clarified, specifically targeting LMI, underserved, and rural communities.

In a nod to the diversity of banks, the proposal tailors evaluations to bank size and type, allowing smaller institutions to continue operating under existing frameworks with the option to transition to new provisions. The proposal maintains a unified approach from regulatory agencies.

Comments on this groundbreaking proposal are due by August 5, 2022, marking an important step in the ongoing battle against economic disparity in America’s neighborhoods.

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