CRA reform, take 2: FDIC Board to discuss new proposed rule Thursday

A new proposed rule to modernize banks’ Community Reinvestment Act (CRA) requirements is on the discussion agenda for Thursday’s open meeting of the Federal Deposit Insurance Corp. (FDIC) Board, according to a notice published on the agency’s website.

Unlike the last time regulators discussed CRA reform, this effort is expected to ultimately produce a joint rulemaking issued in concert by the FDIC, the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC).

Current rules under the federal anti-redlining law have reverted generally to a version all three banking agencies adopted in 1995 after the OCC’s acting comptroller, Michael J. Hsu, rescinded the version issued in 2020 by his predecessor, Joseph P. Otting. (Otting left the agency shortly after issuing that rulemaking.) Since that rescission, the three agencies have been working to come up with a joint proposal that better addresses the way banking is conducted today.

Hsu noted in a recent speech that the coming proposed rule is expected, among other things, to facilitate a more comprehensive evaluation by regulators of the CRA performance of banks that offer mortgage loans outside traditional, branch-based assessment areas. Hsu said studies have shown banks do a better job of lending to low- and moderate-income (LMI) individuals and areas within their traditional CRA assessment areas than they do outside of them.

Thursday’s FDIC Board meeting, viewable by webcast only, is slated for 10 a.m. Eastern.

FDIC Board May 5 meeting agenda