What’s Ahead for the Community Reinvestment Act: A Discussion

A virtual session this July will explain the first major changes proposed in more than a quarter century to the Community Reinvestment Act (CRA).

Hosted by the Federal Reserve Bank of Cleveland, the session titled What’s Ahead for the Community Reinvestment Act: A Discussion will take place from 2 to 3 pm ET on July 14. We encourage you to submit questions before the event, and we encourage you to tell others you know who have an interest in the landmark law, enacted 45 years ago to encourage banks to help meet the credit needs of their local communities, including low- and moderate-income neighborhoods, in a safe and sound manner.

Federal bank regulatory agencies—the Fed, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency—jointly issued a proposal on May 5 to strengthen and modernize regulations implementing the CRA to better achieve the purposes of the law.

Building on feedback from stakeholders and research, the agencies invite public comment on their joint proposal, which has the following key aims:

• Expand access to credit, investment, and basic banking services in low- and moderate-income communities. Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit. The proposal would promote community engagement and financial inclusion. It would also emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities.
• Adapt to changes in the banking industry, including internet and mobile banking. The proposal would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
• Provide greater clarity, consistency, and transparency. The proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency. It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities.
• Tailor CRA evaluations and data collection to bank size and type. The proposal recognizes differences in bank size and business models. It provides that smaller banks would continue to be evaluated under the existing CRA regulatory framework with the option to be evaluated under aspects of the new proposed framework.
• Maintain a unified approach. The proposal reflects a unified approach from the bank regulatory agencies and incorporates extensive feedback from stakeholders.

For more information, visit the Federal Reserve Board’s CRA Proposed Rulemaking website.

Comments on the proposal will be accepted through August 5, 2022, via this website. (The July 14 virtual session will welcome Q&A but is not a channel through which we will formally collect input.)