The writing has been on the wall for the 2023 CRA rule for some time now – and at this point, it isn’t so much handwriting as it is graffiti. After all, anyone keeping tabs on the rule’s trajectory likely knows that it was enjoined before it ever took effect – and last July, the OCC, Federal Reserve and FDIC jointly proposed rescinding it and returning to the prior framework.
For all their efforts, the agencies haven’t explicitly repudiated the rationale for modernizing the CRA. Quite the opposite, in fact: in their 2025 rescission proposal, they expressly say that their “reasons for modernizing the CRA framework remain valid,” and in the new proposal, the agencies continue to acknowledge both significant changes in modern banking and “specific and known challenges” with the existing rules.
And yet, rather than merely “returning to the familiar 1995-era framework” (a phrase often repeated by the agencies throughout this process), the new NPRM would seemingly do more than restore the status quo, materially loosening several of its existing requirements – most notably through increased asset thresholds.
Currently, banks above approximately $1.649 billion generally fall into the large-bank CRA regime, which means separate lending, investment, and service tests, along with mandatory collection and reporting of certain small-business, small-farm, community-development and assessment-area data. The proposal would raise that threshold to $10 billion. Banks between $1 billion and $10 billion would instead become “intermediate banks,” subject to the substantially more flexible framework currently used for intermediate small banks. The agencies themselves concede that the large-bank tests are “more comprehensive in scope” and that the change is specifically intended to “relieve regulatory burden.”
The numbers underscore just how consequential that shift would be. Using 2024 and 2025 Call Report data, the agencies estimate that only 86 banks – or 2.4% of the approximately 3,577 OCC- and FDIC-supervised banks subject to the CRA – would remain large banks. Approximately 97.6% would fall below the $10 billion threshold.
And though we won’t delve into every substantive change of the NPRM (a full Compliance Hub summary of the proposal is currently underway and will be available shortly), it’s important to note that the relief here doesn’t stop at reporting. Intermediate banks would no longer receive separately rated investment and service tests. Arguably more striking, the proposal would allow an intermediate bank to receive an overall “satisfactory” rating based on satisfactory lending performance even where its community-development performance is weaker. The NPRM states that the change is intended to permit stronger lending performance to “compensate for weaker performance on the CD test.”
Further, banks between $412 million and $1 billion would benefit from a separate easing of the framework: because the small-bank threshold would rise to $1 billion, those institutions would lose the separate community-development test entirely.
Compliance Hub’s full summary of the NPRM will be available very soon, and for any other CRA questions, feel free to contact us on the Hotline.
Brett Goodnack, JD, CAMS
Compliance Advisor