OCC, FDIC Propose Significant Changes to CRA Framework
The OCC and FDIC have proposed changes to Community Reinvestment Act (CRA) regulations that could reduce compliance burden for many community banks while changing how lending and community development activities are evaluated.
BankIn Minnesota public affairs partner Winthrop & Weinstine recently outlined the proposal and its potential impact on financial institutions. Among the most significant changes are higher asset thresholds for CRA classifications, a greater emphasis on lending performance, and new flexibility around community development activities.
What's Being Proposed
The proposal would raise the threshold for a small bank to less than $1 billion in assets, up from approximately $600 million, while banks with assets between $1 billion and $10 billion would be classified as intermediate banks. Large banks would be those with $10 billion or more in assets. The thresholds would also be adjusted annually for inflation.
For banks that would be reclassified under the proposal, the change could mean fewer data collection, reporting, and other compliance requirements.
Other proposed changes highlighted by Winthrop & Weinstine include:
- Greater emphasis on lending performance. A new major product line approach would focus retail lending evaluations on a bank's primary lending activities.
- More flexibility for intermediate banks. Strong lending performance could offset weaker community development performance when determining an overall CRA rating.
- Clearer community development standards. The proposal would provide more objective criteria for qualifying activities and establish a publicly available list of examples.
- A new confirmation process. Banks could ask their regulator to determine whether certain community development activities qualify for CRA consideration.
- Greater geographic flexibility. Banks meeting specified thresholds could receive consideration for certain community development activities outside their assessment areas.
- Protection for previously qualifying activities. Community development activities eligible for CRA consideration when undertaken could continue receiving consideration even if eligibility standards later change.
What It Could Mean for Your Bank
The proposal is intended in part to reduce regulatory burden, particularly for smaller institutions. Winthrop & Weinstine notes that banks near current CRA asset thresholds should evaluate hoe the proposed classifications could affect their compliance obligations and future planning.
Banks may also want to consider how the proposed changes could affect their current CRA strategy, community development activities, data collection and reporting, and longer-term plans.
Because the rule is still proposed, banks also have an opportunity to weigh in. Comments are due October 13, 2026.
Submit Comments on the Proposed Rule
Read the Full Analysis
Winthrop & Weinstine's Client Alert provides a detailed breakdown of 10 key provisions in the proposal, including the potential implications for banks of different asset sizes.