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The CRA was enacted in 1977 to ensure that each insured depository institution serves the convenience and needs of its entire community, including low and moderate-income (“LMI”) neighborhoods, consistent with its safe and sound operation. This mission is the essence of what community banks do.
In 2023 the OCC, FDIC, and Federal Reserve Board published a nearly 1,500-page final rule creating a new CRA framework. We view some aspects of the rule, including the increased asset thresholds, a qualifying activities list and confirmation process, and the ability of small banks to opt-in to the new framework or continue to be evaluated under their current framework as beneficial to community banks.
However, we are deeply concerned that the complexity of the new tests, in particular the Retail Lending Test, will increase the cost of compliance and make it more difficult to attain “high satisfactory” or “outstanding” ratings. We are also concerned that Retail Lending Assessment Areas (“RLAAs”) may have the unintended consequence of causing larger community banks to reduce or eliminate lending away from their branches in order to avoid triggering the creation of RLAAs.
On February 5, 2024, ICBA and other groups filed a lawsuit against the federal banking regulators, challenging the agencies for exceeding their statutory authority with their recent Community Reinvestment Act final rule.
The complaint — which was filed in the Northern District of Texas with the Independent Bankers Association of Texas,
Texas Bankers Association, Amarillo Chamber of Commerce, American Bankers Association, U.S. Chamber of Commerce, and Longview Chamber of Commerce — asks the court to vacate the final rule and seeks a preliminary injunction to pause it while
the court decides the merits of our case.
The complaint explains how the new rules will limit future bank lending. It also identifies how the regulatory agencies exceeded their statutory authority in violation of the Administrative Procedure Act by:
Evaluating bank lending well beyond banks’ deposit taking footprint, as required by CRA. The final rules will evaluate bank lending across the entire country, eliminating the statutory focus on a bank’s lending in its “local community.”
Evaluating institutions with more than $10 billion in assets for providing deposit products and services to low- and moderate-income consumers, even though the CRA only authorizes regulators to assess a bank’s record of meeting the credit
needs of its local communities.
Jenna Burke
EVP, General Counsel, Government Relations & Public Policy, ICBA
[email protected].
Nicole Swann
VP, Communications, ICBA
[email protected]
Sep. 21, 2020
Washington, D.C. (Sept. 21, 2020) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey released the following statement on today's Federal Reserve advance notice of proposed rulemaking on reforming Community Reinvestment Act regulations.
"With a mission of maximizing the availability of financial services and credit in local communities, ICBA and the nation's community banks appreciate regulatory efforts to modernize the Community Reinvestment Act. Today's Federal Reserve advance notice of proposed rulemaking on reforming CRA rules is a constructive step toward a clearer and more consistent framework.
"The Fed's request for feedback on provisions to define activities that qualify for CRA credit, provide dashboards to track progress, and avoid mandates on geographically tracking deposits for small banks are positive steps to enhance clarity and transparency. Further, the ANPR's request for comment on allowing smaller community banks to remain under the existing CRA framework is a positive approach to help avoid excessive burdens and a one-size-fits-all approach on these local institutions.
"While ICBA generally supports modernizing CRA regulations to enhance transparency and reflect banking industry changes driven by technology, community banks remain concerned that agency efforts will impose new data-collection costs and regulatory complexity that could inhibit their ability to serve local communities.
"ICBA will fully review today's Fed proposal with our member community banks to assess how it may affect their ability to meet the needs of their communities, including low- and moderate-income individuals. We look forward to continuing to work with the Fed on CRA modernization."
About ICBA
The Independent Community Bankers of America creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.
With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, over $4.4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.
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