After what has seemed like an endless series of irregular periods of action, including the issuance of a Final Rule by the OCC (that was later revoked), the OCC, Federal Reserve, and FDIC have finally issued their long-awaited amendments to the Community Reinvestment Act (CRA) regulations. Banking has come a long way since 1977, when the original CRA regulations were issued – we’ve seen the evolution into digital products and services, the incredible new array of products and services, and major changes in the way those products are delivered.
But the core concepts of the CRA remain: banks are evaluated on their performance within their communities, particularly on the lending side, with a particular focus on Low- and Moderate-Income (LMI) areas within its assessment area. The CRA regulations have long needed to be updated to reflect the new realities of banking, and we finally know what those responsibilities are. The good news is that the Final Rule is not dramatically different than the Proposal we’ve been studying for some time. However, as always, there are important differences we must understand and incorporate.
Also as expected, the compliance responsibilities are divided into three distinct categories, depending on bank asset size: small, intermediate, and large. The larger a bank is, the more changes to its CRA responsibilities it will see. But change will impact all banks to some degree.