Revisions to rules implementing anti-redlining laws that are designed to “strengthen and modernize” the regulations to “better achieve the purposes of the law” were adopted and jointly issued by the federal banking agencies Tuesday.
The changes to the rules applying the Community Reinvestment Act (CRA), the three agencies said (the Federal Deposit Insurance Corp. (FDIC), Federal Reserve and Office of the Comptroller of the Currency (OCC), were built on feedback from commenters on the proposed rule and research. The final rule, the agencies said, aims to accomplish four goals:
- Encourage banks to expand access to credit, investment, and banking services in low- to moderate-income (LMI) communities.
- Adapt to changes in the banking industry, including internet and mobile banking.
- Provide greater clarity and consistency in the application of the CRA regulations.
- Tailor CRA evaluations and data collection to bank size and type.
Most of the rule’s requirements, the agencies said, take effect Jan. 1, 2026. Other requirements, including data reporting requirements, will be applicable a year later (on Jan. 1, 2027).
The FDIC Board adopted the new rule on a vote of 3-2, with Chairman Martin Gruenberg and appointed members Michael Hsu (acting comptroller of the currency) and Rohit Chopra (director of the Consumer Financial Protection Bureau (CFPB)) favoring the rule. All three were nominated by President Joe Biden (D). The other two Senate-confirmed board directors (Vice Chairman Travis Hill and Jonathan McKernan) voted against the new rule. While both were nominated by Biden, the pair fill seats designated for Republicans.
On the Federal Reserve side, Chair Jerome H. (“Jay”) Powell, Vice Chair for Supervision Michael Barr and Gov. Christopher Waller voted to finalize the rule. Gov. Michelle Bowman voted in opposition.
According to a fact sheet issued by the agencies, details of the goals of the regulation include it:
- Encourages expanded access to financial services in LMI communities: The agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate so that the CRA continues to be a strong and effective tool to address inequities in access to credit and financial services. The final rule promotes financial inclusion by supporting bank activities with Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs) and in Native Land Areas, persistent poverty areas, and other high-need areas.
- Adapts to such changes as mobile, online banking: CRA regulations will be updated to evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models. The rule is calibrated to recognize the continued importance of bank branches, while establishing a framework to evaluate the digital delivery of banking products and services for certain banks.
- Provides greater clarity, consistency in application of CRA: A new “metrics-based” approach is adopted for evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data. The agencies will develop data tools using reported loan data that give banks and the public additional insight into performance standards. The final rule also clarifies eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, native, and rural communities.
- Tailors CRA evaluations and data collection to bank size and type: Bank size and business models is recognized under the rule. Small banks will continue to be evaluated under the existing framework with the option to be evaluated under the new framework. The rule also exempts small and intermediate banks from new data requirements that apply to banks with assets of at least $2 billion and limits certain new data requirements to large banks with assets greater than $10 billion.