Board of Governors of the Federal Reserve System

The interim final rule and final rule amending the Community Reinvestment Act ("CRA") regulations before the Board today, less than six months following the CRA rule's approval, provide more evidence of the rushed and overzealous nature of the CRA rulemaking process. As I noted at that time, the CRA final rule is unnecessarily complex and extraordinarily lengthy.¹ In my view, the appropriate approach to address the changes considered by these amendments, and the other more substantive issues with the final rule, would have been a re-proposal. Now, less than six months after voting on the final rule, we have already identified at least one significant issue that warrants changing the finalized regulation. I am concerned that this change will not be the only significant issue that will require further consideration given the length and complexity of the final rule as the agencies continue to work toward implementation of the changes.

As I noted in my statement during the open Board meeting in October, the new requirement for "large" banks to delineate entire counties rather than allowing those banks to continue to use partial counties for their assessment areas could introduce unintended consequences.² Under the current final rule, these "large" banks would have to redefine the new, broader full county assessment areas by April 1, 2024 (in less than two weeks' time).

Some of these banks would no longer be subject to these requirements after January 1, 2026, due to the redefinition of a "large" bank as of that date under the rule. While the interim final rule is helpful in that it aligns the requirements for these banks to January 1, 2026, and gives other "large" banks more time to comply with the requirement to redefine full county assessment areas, it is unrealistic to expect that banks have not already expended significant resources to comply with this new requirement. Banks do not wait until a week before a new rule becomes effective to ensure that they are in compliance.

This interim final rule illustrates the rushed, overly complex, and unwieldy nature of the CRA rulemaking.

1. Statement on the Community Reinvestment Act Final Rule by Governor Michelle W. Bowman, October 24, 2023. Return to text

2. Id. Return to text