On July 31, 2026, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) released joint statements issuing a Notice of Proposed Rulemaking that would make targeted changes to their existing CRA rules. The proposal is intended to better align the CRA framework with its statutory purpose, reduce unnecessary regulatory burden, increase transparency, and provide greater clarity regarding activities that qualify for CRA credit.
The proposal follows years of uncertainty surrounding CRA modernization efforts. And regulators continue to apply the CRA framework that has largely been in place since 1995 while seeking a more targeted path forward.
What Are the Key Changes Proposed?
One of the most significant aspects of the proposal is a renewed emphasis on lending activities. Under the proposal, the agencies would narrow the retail banking services considered during CRA evaluations to focus on credit services, excluding deposit services from consideration. Additionally, certain concepts would be clarified to ensure greater recognition of activities that have a direct nexus to lending.
The proposal also seeks to strengthen oversight of community development grants and donations. Regulators expressed concern that community development funding should reach the communities it is intended to benefit rather than being diverted through excessive administrative or operating costs. To address this concern, community development grants would generally need to be directly tied to a plan, project, or initiative where community development is the primary purpose. Furthermore, large banks with more than $10 billion in assets would be required to document that grant recipients maintain overhead costs that do not exceed 15 percent.
Another theme throughout the proposal is regulatory relief, particularly for community banks. The agencies are proposing to increase the asset threshold for small banks to $1 billion and increase the threshold for intermediate banks to $10 billion. Banks with assets of $10 billion or less would no longer be subject to many CRA data collection, maintenance, and reporting requirements and would receive more flexible supervisory treatment. Regulators also propose focusing evaluations on a bank’s major product lines and leveraging technology to modernize CRA public notices and public file requirements.
What Challenges Might Banks Face?
As with prior CRA reforms, banks may face several implementation challenges if the proposal is finalized.
- Banks will need to evaluate how a greater emphasis on lending activities could affect their CRA strategies and overall examination results.
- Banks that currently receive CRA consideration for a broad range of retail services may need to reassess which activities will continue to qualify if deposit services are no longer considered.
- Community development programs and charitable initiatives may require additional documentation to demonstrate that funds are directly supporting qualifying community development purposes. Large banks may also need to establish procedures for monitoring recipient overhead expenses.
- Banks whose asset sizes fall near the proposed thresholds will need to analyze how revised classifications could affect examination procedures, reporting obligations, and compliance expectations.
- Banks will need to understand the agencies’ expanded guidance regarding qualifying and non-qualifying community development activities.
- Compliance, lending, and CRA officers should closely monitor the proposal’s progress and evaluate existing policies, procedures, and strategic planning efforts to identify potential areas requiring revision.
Why Is the Federal Reserve’s Absence Significant?
Unlike the 2023 CRA modernization effort, which was issued jointly by the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), this proposal was issued exclusively by the FDIC and OCC. Historically, interagency consistency has been one of the hallmarks of CRA administration. The absence of the FRB raises questions and uncertainty about whether the federal agencies could once again be moving toward different CRA frameworks depending on the bank’s primary regulator. For now, it remains unclear whether the Federal Reserve shares the same policy priorities or intends to pursue separate rulemaking.
The absence of a joint approach could also complicate strategic planning for banking organizations that operate through multiple bank charters or affiliates supervised by different agencies. One of the stated goals of prior CRA modernization efforts was to create greater consistency in how CRA performance is measured, evaluated, and communicated. If the agencies ultimately adopt different standards, banks may be faced with navigating multiple regulatory frameworks and examination expectations. This could increase compliance complexity rather than reduce it.
Preparing for Change: Opportunities for CRA Program Enhancement
Regardless of whether the proposal is adopted in its current form, banks can use this period of regulatory transition to assess their readiness and identify areas where existing practices may benefit from enhancement.
One area of focus is a comprehensive CRA readiness assessment. Banks may benefit from evaluating whether current processes, documentation, reporting practices, and governance structures would support the proposed emphasis on lending activities and community development impact. A readiness assessment can help management identify gaps before they become examination concerns and establish a roadmap for future compliance efforts. In addition, the agencies’ efforts to provide greater clarity regarding qualifying community development activities create an opportunity for banks to revisit their overall CRA strategic planning. Banks may benefit from evaluating whether current lending, investment, service, and community development initiatives align with evolving regulatory priorities.
The proposal also provides an opportune time to review CRA-related policies and procedures. As the agencies seek to clarify qualifying community development activities, lending-focused evaluation criteria, and documentation expectations, banks should consider whether their existing policies accurately reflect current regulatory expectations and effectively guide business line personnel responsible for CRA activities.
Internal audit and independent review functions may likewise play an important role during this period. A targeted CRA audit can provide valuable insight into the adequacy of controls surrounding data integrity, qualifying activity identification, community development documentation, board reporting, and regulatory change management. Such reviews may help banks identify potential weaknesses before future examinations and demonstrate a proactive compliance culture.
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