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 banks
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.
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Media Contacts:
Federal Reserve Board Andrew
Williams (202) 452-2955
FDIC David
Barr (202)
898-6992
OCC Dean DeBuck (202)
874-5770