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Bank regulators propose tighter CRA credit for community grants
For large banks with more than $10 billion in assets, the proposal would cap indirect grant and donation costs at 15%, and comments are due 60 days after publication.
Federal banking regulators have issued a Community Reinvestment Act proposal that would narrow how banks receive credit for community development activities, while also raising asset thresholds that determine how institutions are evaluated, according to HousingWire. The FDIC and the Office of the Comptroller of the Currency said the notice of proposed rulemaking is meant to refocus CRA toward statutory objectives, increase clarity around CRA evaluations, and reduce compliance burdens, with banks still assessed under performance tests tied to size, business model, or an approved strategic plan. Under the proposal, regulators would place more explicit emphasis on lending activity as the primary way to meet community credit needs, with less focus on deposit products. A key dispute centers on how the framework treats community development grants and operating support, as the agencies seek to tighten credit so funds are more clearly linked to projects where community development is the primary purpose. Housing and consumer advocates criticized the approach. David M. Dworkin, president and CEO of the National Housing Conference, said the rule is particularly concerning because it would limit CRA consideration for private-sector operating support, which he argued could reduce funding for Community Development Financial Institutions, affordable housing organizations, homeownership counselors, fair housing groups, and other nonprofits. Comments are due 60 days after the proposal is published in the Federal Register.