Banking Regulators Propose Rollback of CRA Rule

The FDIC, the FRB and the OCC proposed to rescind a 2023 final rule that created a new framework for the implementation of the Community Reinvestment Act ("CRA") and to reinstate the earlier 1995 framework.

The final rule covered the origination and purchase of home mortgage loans, multifamily loans, small business loans, small farm loans and automobile lending. It applied to community development loans, investments and services under various tests. The rule also classified (i) large banks as those with assets of at least $2 billion over the prior two calendar years, (ii) intermediate banks as those with assets of at least $600 million and (iii) small banks as those with lesser assets. (See previous coverage.)

The US District Court for the Northern District of Texas issued an injunction preventing the enforcement of the regulation. During the pendency of an appeal on the preliminary injunction, the Fifth Circuit granted an unopposed motion by the banking regulators "to stay the appeal pending completion of a new rulemaking that would propose rescinding the enjoined 2023 CRA Final Rule and reinstating the CRA framework that existed prior to the 2023 CRA Final Rule." In the current notice of proposed rulemaking, the agencies said their reconsideration of the rule was "precipitated primarily by the uncertainty created by the pending litigation."

The proposed rollback would formally rescind the 2023 rule and reestablish the 1995 standards with updated asset thresholds and technical corrections.

Comments are due 30 days after date of publication in the Federal Register.