Community Reinvestment Act

What’s the Issue?

Banks care about the vibrancy and vitality of their communities, and they support the goals of the Community Reinvestment Act. Designed to be broad, flexible, and responsive to changes within communities, the law established guidelines to ensure banks serve the needs of their local communities. Unfortunately, the objectives of the CRA statute are being undermined by outdated implementing regulations.

CRA was established more than 40 years ago, and current regulations do not reflect significant changes that have occurred in the banking sector – especially the advances in technology that have enhanced how banks serve communities.

How Can CRA Be Improved?

Regulators are looking at updating CRA to reflect how banking has evolved. CRA reform should accurately reflect and measure all banking activities and help align resources with community needs.

To improve its effectiveness, regulators should modernize CRA to:

  • Recognize where technology is serving customers, not just physical locations
  • Make regulatory standards clear and transparent
  • Tailor requirements to different bank business models and geographies

What’s Next For CRA?

In 2019, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) proposed a joint regulation that would change how banks are evaluated under the CRA.

The FDIC declined to finalize the rule due to the Covid-19 pandemic and in May 2020, the OCC unilaterally finalized changes to the CRA. One year later- May 2021- the OCC has decided to pause implementation of its new CRA regulations. 

The Federal Reserve is currently undergoing its own overhaul of CRA rules, but now both the FDIC and the OCC have the option to join the Fed and issue one set of rules to govern CRA.  

Learn more in-depth about CRA here.