Summary:
On October 24, 2023, the FDIC Board voted to approve a final rule, to be issued jointly with the Board of Governors of the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC), which makes regulatory amendments to the FDIC rule implementing the Community Reinvestment Act of 1977 (CRA).
Applicability statement: The content and material referenced in this FIL apply to all financial institutions supervised by the FDIC.
Reflexes:
The final rule updates the CRA regulations to achieve the following key objectives:
- Encourage banks to expand access to credit, investment, and banking services in low and moderate income (LMI) communities. Under the final rule, agencies will evaluate banking performance in the various activities they perform and in the communities in which they operate so that the CRA remains a robust and effective tool to address inequalities in access to credit and financial services. The final rule promotes financial inclusion by supporting banking activities with minority depository institutions and community development financial institutions and in native land areas, rural areas, persistent poverty areas, and other high-need areas.
- Adapt to changes in the banking industry, including mobile and internet banking. The final rule will update the CRA regulations to evaluate loans outside the traditional evaluation areas generated by the growth of non-branch service delivery systems, such as online and mobile banking, branchless banking, and hybrid models. The final rule is calibrated to recognize the continued importance of bank branches, while establishing a framework for evaluating the digital delivery of banking products and services for certain banks.
- Provide greater clarity and consistency in the application of CRA regulations. The final rule takes a new metrics-based approach to evaluating retail bank lending and community development financing, using benchmarks based on demographic and peer data. The agencies will develop data tools using reported loan data that provide banks and the public with additional information on performance standards. The final rule also clarifies eligible CRA activities, such as affordable housing, that focus on LMI, underserved, Native, and rural communities.
- Tailor CRA assessments and data collection to the size and type of bank. The final rule recognizes differences in bank sizes and business models. For example, small banks will continue to be assessed under the existing framework with the option to be assessed under the new framework. The final 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.
Related topic:
Community Reinvestment Act
