Banking Agencies Issue Final CRA Rules
The final Community Reinvestment Act (CRA) rules, which took effect on Sept. 1, 2005, are intended to reduce the regulatory burden on community banks. At the same time, the new rules support the CRA’s original purpose by encouraging these banks to provide meaningful community development lending, investment, and services.
Size thresholds adjusted
The amendments raise the asset size threshold for small banks to less than $1 billion. Under the new rules, intermediate small banks—institutions with assets of $250 million to less than $1 billion—no longer need to collect and report CRA loan data. But examiners will continue to evaluate these banks’ lending activity and will disclose those results in the public CRA evaluations. Additionally, intermediate small banks will be evaluated under two separate tests: the existing lending test for small banks and a new, flexible community-development test.
New rules expand definitions, clarify laws
For banks of any size, the amendments expand the definition of community development to include activities that revitalize or stabilize designated disaster areas and distressed or underserved rural areas.
Finally, the regulations also clarify when discrimination or other illegal credit practices by a bank or its affiliate will adversely affect an evaluation of the bank’s CRA performance.
The final CRA rules were issued jointly by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency.