The federal bank regulatory agencies—including the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and Office of the Comptroller of the Currency—are proposing to rescind the Community Reinvestment Act (CRA) final rule issued in October 2023.
The agencies issued the CRA Final Rule in 2023 to modernize their CRA regulations to account for changes in the banking industry, including internet and mobile banking. If fully implemented, the final would have raised the asset-size thresholds for small, intermediate, and large bank and revised the performance tests and other aspects of the 1995 CRA regulations.
As adopted, the 2023 CRA Final Rule would have become effective on April 1, 2024. However, most substantive provisions of the rule would not have become applicable until Jan. 1, 2026, or Jan. 1, 2027. During this transition period, the 2023 CRA Final Rule specified that the 1995 CRA regulations would remain applicable.
With this latest action, the final rule will be rescinded, and it will be replaced with the prior CRA regulations that were originally adopted by the agencies in 1995, with certain technical amendments. Ultimately, it would restore certainty in the CRA framework for stakeholders in light of pending litigation and limit regulatory burden on banks.
“I support today’s proposal to rescind the Board’s 2023 Community Reinvestment Act (CRA) final rule,” The Fed’s Vice Chair for Supervision Michelle Bowman said. “As I noted at the time, the 2023 final rule likely exceeded the statutory authority of the agencies and was unnecessarily complex, overly prescriptive, and contained disproportionately greater costs than benefits, adding significantly greater regulatory burden for all banks, but especially for community banks.”
This rescission essentially means there will be a permanent return to the CRA framework that existed before the 2023 final rule.
Comments on the proposal are due 30 days after date of publication in the Federal Register.