OCC, FDIC propose another CRA revamp

OCC and FDIC have proposed another major overhaul of Community Reinvestment Act (CRA) rules, aiming to refocus examinations on lending, narrow what counts for CRA credit, and tighten scrutiny of bank grants to “activist” community groups, while easing requirements for smaller institutions.occ+2

New CRA Proposal: What OCC and FDIC Are Doing

On July 31, 2026, the OCC and FDIC issued a joint notice of proposed rulemaking to amend their CRA regulations, without the Federal Reserve as a co‑sponsor. The agencies say the proposal is designed to “refocus on the statutory objective” of encouraging banks to meet the credit needs of their communities, particularly low‑ and moderate‑income (LMI) areas. In practice, the draft rule largely retains the pre‑2023 CRA framework while layering in substantive changes that shift attention toward credit and away from certain services and grants.occ+3

The proposal comes on the heels of a turbulent multi‑year modernization effort in which all three banking regulators approved a 1,500‑page CRA final rule in 2023, with most provisions scheduled to take effect beginning in 2026. That earlier rule was itself targeted in 2025 by a joint proposal to rescind the 2023 framework and revert to modified 1995 regulations, underscoring the political and legal volatility around CRA implementation.federalreserve+1

Key Changes: Lending Focus, Grant Limits, and Thresholds

Banking agencies frame the new proposal as a rebalancing of CRA evaluations back toward lending activity and away from deposits and broad service metrics. Among the headline changes:bankingjournal.aba+1

• Excluding deposit services from CRA consideration
  The proposal would narrow the range of retail banking services that receive CRA credit, focusing on credit services and giving greater weight to lending activities, while excluding deposit services from qualifying retail services. This could reduce CRA recognition for low‑cost accounts and other deposit‑related offerings that previously counted toward service tests.bankingjournal.aba

• Tightening community development grant standards
  OCC and FDIC would limit CRA consideration of community development grants to funds directly used for specific plans, projects, or initiatives where community development is the primary purpose. Large banks would have to document that grant recipients do not have overhead costs exceeding 15 percent, with regulators emphasizing a desire to prevent funds from being “diverted to other activities or excessive operating costs.” Reporting around the proposal and related commentary from Trump‑appointed regulators explicitly describe an intent to curb bank funding for “activist” community advocacy groups and “left‑wing activist causes” under CRA.occ+4

• Raising asset thresholds and easing data obligations
  The proposal would raise asset size thresholds for small banks from $412 million to $1 billion, and for intermediate banks from $1.65 billion to $10 billion. Regulators also signal reduced CRA data collection and reporting expectations for more institutions, framing these changes as burden relief for community banks. Some analyses note that banks with under $10 billion in assets could see significant relief from certain data and reporting requirements compared with the 2023 rule.occ+3

• Codifying qualifying activities and creating a confirmation process
  OCC and FDIC propose an illustrative list of community development activities that do and do not qualify for CRA credit, along with a process for banks to confirm in advance whether an activity will receive CRA consideration. This approach builds on longstanding industry requests for clearer, published examples and greater transparency around qualifying activities.bankingjournal.aba+1

Political Context: Targeting “Activist” Groups and Redefining CRA

Coverage of the proposal emphasizes that Trump‑aligned banking regulators are seeking to use CRA—which was enacted in 1977 as an anti‑redlining statute—to direct funding away from advocacy organizations they characterize as “activist.” Officials argue that an overbroad interpretation of community development grants under the 2023 rule allowed banks to support national advocacy efforts instead of local credit access, and that overhead caps and tighter qualifying criteria will redirect funds to concrete projects in LMI neighborhoods.news.bloomberglaw+3

Consumer and community groups, however, have historically relied on CRA‑motivated grants and investments as a flexible tool to support organizing, counseling, legal assistance, and policy advocacy around fair lending and neighborhood revitalization. Limiting CRA consideration to grants with tightly defined project uses and low administrative costs, combined with higher asset thresholds and narrowed service tests, could materially reduce financial support flowing to these organizations—even if total lending volumes in certain markets increase.fedcommunities+3

The proposal also continues a pattern of fragmentation among federal banking regulators on CRA modernization. OCC previously attempted a unilateral CRA rule revamp in 2020 without FDIC or Federal Reserve support, prompting industry criticism and, ultimately, a three‑agency joint rule in 2023. Now, OCC and FDIC are again moving ahead without the Fed, raising questions about how CRA exams will be harmonized across institutions supervised by different agencies.bankingdive+3

Implications for Credit, Collection, and Compliance

For credit and collection stakeholders, the proposed CRA revamp has several practical implications:

• Portfolio and product design
  With deposit services excluded and lending elevated, banks may concentrate more heavily on originating loans in LMI geographies and among LMI borrowers to demonstrate CRA performance. This could support continued or increased use of specialized credit products—small‑dollar loans, CRA‑eligible mortgages, community development loans—that flow into servicing and collection channels.arnoldporter+1

• Third‑party relationships and community partnerships
  Tighter rules around grants and overhead caps may alter how banks structure relationships with nonprofit partners, legal aid organizations, and counseling agencies involved in consumer credit, foreclosure prevention, and debt management. Programs that previously relied on CRA‑motivated grant funding might see increased pressure to document direct project use and keep administrative ratios below 15 percent, potentially affecting capacity to deliver services that influence delinquency and repayment outcomes.bankingdive+2

• Compliance, data, and exam strategy
  Changes to asset thresholds and data collection requirements could lighten CRA burdens for many community and regional banks, but at the cost of reduced transparency about where credit and community development resources flow. Larger banks, particularly those above $10 billion in assets, would need to enhance documentation for qualifying grants and align their CRA strategies with a more narrowly construed list of activities, while monitoring how CRA credit interacts with fair lending, UDAAP, and broader consumer compliance expectations.occ+4

• Litigation and regulatory risk
  Given recent court challenges that blocked prior CRA regulations and prompted joint proposals to rescind the 2023 rule, this new revamp is likely to attract close scrutiny from advocacy groups, state attorneys general, and potentially the courts. Banks, servicers, and collection agencies embedded in CRA‑driven lending programs should anticipate a multi‑year period of regulatory uncertainty, with shifting expectations around what qualifies as community development and how lending in LMI communities will be evaluated.federalreserve+2

What Happens Next

The OCC and FDIC proposal is subject to a 60‑day public comment period once it is published in the Federal Register. Trade associations, consumer advocates, community organizations, and supervised institutions are expected to submit extensive feedback, particularly on overhead caps, qualifying activity definitions, and asset thresholds. After reviewing comments, the agencies could finalize the rule, revise it substantially, or align more closely with the three‑agency 2023 framework, depending on legal constraints and political priorities.federalreserve+5

For now, CRA compliance teams, credit risk managers, and collection leaders should begin scenario‑planning around a CRA regime that:

• Prioritizes lending over deposit services in CRA exams

• Scrutinizes grant recipients’ overhead and “activist” profiles

• Raises small and intermediate bank thresholds and adjusts data burdens

• Codifies a narrower list of CRA‑eligible community development activities