The federal banking agencies today approved final Community
Reinvestment Act (CRA) rules that are intended to reduce regulatory
burden on community banks while making CRA evaluations more effective
in encouraging banks to meet community development needs. The final
rules are essentially as the agencies proposed them in March.
The final rules raise the small bank asset size threshold to assets
of less than $1 billion without regard to holding company affiliation.
Accordingly, the new rules reduce data collection and reporting
burden for "intermediate small banks" (banks with assets
between $250 million and less than $1 billion ) and, at the same
time, encourage meaningful community development lending, investment
and services by these banks.
Under the new rules:
- Intermediate small banks will no longer need to collect and
report CRA loan data. Nevertheless, examiners will continue to
evaluate bank lending activity in the CRA examinations of intermediate
small banks and disclose results in the public evaluation.
- Intermediate small banks will be evaluated under two separately
rated tests: the small bank lending test; and a flexible new community
development test that includes an evaluation of community development
loans, investments, and services in light of community needs and
the capacity of the bank. Satisfactory ratings are required on
both tests to obtain an overall satisfactory CRA rating.
In addition, for banks of any size:
- The new rules expand the definition of community development
to include activities that revitalize or stabilize designated
disaster areas and distressed or underserved rural areas. By including
designated distressed or underserved rural areas, the agencies
intend to recognize and encourage community development in more
rural areas. (Designated distressed or underserved rural areas
are to be listed by the agencies on the Federal Financial Institutions
Examination Council website, www.FFIEC.gov/cra.)
- 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 rules, which are being issued jointly by the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance Corporation,
and the Office of the Comptroller of the Currency, take effect on
September 1, 2005. The agencies will have interim CRA examination
procedures for intermediate small banks in place by August 1.
A draft of the final rules is attached.
Attachment (1.2 MB