WASHINGTON D.C. – While street-level crime grabs headlines, the quiet machinations of federal regulatory bodies can have a significant impact on communities. Today, the Federal Reserve Board and the Federal Deposit Insurance Corporation quietly announced adjustments to the asset-size thresholds used in evaluating banks under the Community Reinvestment Act (CRA). It’s a shift that impacts how financial institutions are scrutinized for meeting the credit needs of all their communities, especially those historically underserved.
The CRA, for the uninitiated, isn’t about sending feds through bank vaults looking for cash. It’s a framework designed to ensure banks aren’t redlining – denying services to low- and moderate-income neighborhoods. Banks are categorized based on their asset size, and each category faces different levels of examination. These thresholds aren’t static; they’re adjusted annually to account for inflation, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The latest CPI-W increase – a hefty 2.91 percent for the period ending November 2024 – has triggered new thresholds for 2025. According to the joint release, a “small bank” is now defined as an institution with assets under $1.609 billion as of December 31st of either of the prior two calendar years. This means banks previously skirting the line will now be subject to more rigorous CRA scrutiny.
The “intermediate small bank” category – a step up in size and complexity – now encompasses institutions with assets of at least $402 million as of December 31st of both of the prior two calendar years, but less than $1.609 billion as of December 31st of either of those years. This tiered system is intended to apply appropriate levels of oversight based on an institution’s size and potential community impact. The feds claim it’s about ‘safe and sound operations,’ but critics argue it’s a bureaucratic shuffle that often favors larger institutions.
These new thresholds take effect January 1, 2025, and will remain in place until December 31, 2025. A complete list of current and historical thresholds is available on the FDIC website. While it might not be a flashy bust, this adjustment is a reminder that the financial world – and the regulations governing it – are constantly shifting, with consequences for communities across the nation. For those wanting to dig deeper, the official Federal Register Notice provides further details.
Contact Information: FDIC’s Carroll Kim can be reached at (202) 898-7389. For inquiries directed to the Federal Reserve Board, contact Chelsea Grate at (202) 452-2955. The release was issued December 19, 2024, and went live at 3:30 p.m. EST.
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