OCC and FDIC Propose Changes to CRA Asset Thresholds

On July 31, the OCC and FDIC issued a new proposed rule on the Community Reinvestment Act. Notably, the Federal Reserve is not joining the rulemaking.
 
The proposed rule would:

• Redefine small banks as those with assets under $1 billion, up from $412 million.

• Eliminate the intermediate small bank subcategory

• Create a separate intermediate bank category covering banks with assets between $1 billion and $10 billion

• Raise the threshold for large banks to $10 billion or more.

As a result, banks with assets between $1.649 billion and $10 billion that are currently subject to the large bank Investment Test would instead be evaluated under the Lending and Community Development Tests.
 
These banks could still receive CRA consideration for LIHTC investments, but they would fall under the Community Development Test alongside community development loans, services, grants and other community development investments.   
 
The proposal would also allow these banks to achieve a Satisfactory rating based on satisfactory performance on the Lending Test, even if performance under the Community Development Test is weaker.  If enacted, the number of large banks subject to the Investment Test would be reduced from 686 to 270 or 61%.
 

Chart: Courtesy of National Housing and Rehabilitation Association

 
The proposed rulemaking also asks for feedback on whether the large bank threshold should be raised even higher to $30 billion.
 

Chart: Courtesy of National Housing and Rehabilitation Association

The banking regulators are accepting public comments until 60 days after the NPR is officially published in the Federal Register.
 
Related Coverage:

• Press Releases: OCC and FDIC issued joint statements.

• Politico: Trump brings the culture war to bank regulation

• Scotsman Guide: Proposal to overhaul fair lending rules draws housing industry backlash

• Bloomberg: Trump to Use Anti-Redlining Law to Target ‘Activist’ Groups

• New York Post: Trump regulators vow to end left-wing ‘shakedown’ of US banks

• National Housing Conference calls for withdrawal of CRA proposal that would undermine affordable housing and community investment

• NAAHL Cautions Against Changes to CRA that Would Reduce Affordable Housing and Community Development Outcomes (Including Impact Fact Sheet)