The federal bank regulatory agencies announced their intent to rescind the Community Reinvestment Act (CRA) final rule issued in October 2023 and reinstate the CRA framework that existed prior to the October 2023 final rule.
The agencies said this move was made in light of pending litigation brought by industry groups and other stakeholders. The agencies — which include the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) – said they will continue to work together to promote a consistent regulatory approach on their implementation of the CRA.
The decision was supported by financial industry groups including the Independent Community Bankers of America (ICBA).
“ICBA and the nation’s community banks applaud the federal banking agencies for their plan to rescind the flawed October 2023 rule reforming the Community Reinvestment Act, which would create disproportionate implementation costs for community banks,” ICBA President and CEO Rebeca Romero Rainey said. As ICBA, the Independent Bankers Association of Texas, and other groups have argued in a lawsuit asking the court to vacate the rule, federal regulators exceeded their statutory authority and acted arbitrarily and capriciously in advancing their amendments to CRA rules.
While stating that community banks support agency efforts to modernize the CRA’s implementing regulations, ICBA said the October 2023 rule disregards community banks’ track record of meeting and exceeding the credit needs of underserved communities.
“ICBA has long advocated for rules that minimize new data collection and reporting burdens for community banks and increase transparency into how ratings are established. We look forward to working with policymakers to tailor CRA requirements and simplify compliance for community banks to ensure CRA policies meet the needs of all community banks and the communities they serve,” Rainey said.