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Regulators Release CRA Final Rule

Yesterday, the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) jointly unveiled their revisions to the Community Reinvestment Act (CRA). The final rule retains several provisions from the proposed rule, including flexibility in retail lending evaluations for banks with assets below $600 million, as well as the introduction of new data collection and reporting obligations for banks exceeding $2 billion in assets.

The final rule would establish a new retail lending evaluation for banks within the $600 million to $2 billion asset range. These banks will also have the option to be evaluated under a novel community development financing assessment. Banks over the $2 billion asset threshold would be assessed by four criteria: a retail lending test, a retail services and products evaluation, a community development financing examination and a community development services analysis. In addition, retail services and product evaluations for banks with assets over $10 billion will encompass digital delivery systems.

The final rule introduces "retail lending assessment areas" for banks with assets exceeding $2 billion. These areas are defined by specific criteria, such as the bank's involvement in a certain number of closed-end home mortgage loans and small-business loans over the past two years. A notable change from the initial proposal is the exemption from retail lending assessment area requirements for banks that conduct 80% or more of their specified retail lending activities within their facility-based assessment areas.

Other notable changes in the final rule include a new metrics-based approach: equal weight being assigned to both retail and community development activities and the retention of the existing CRA downgrade standards, particularly for "discriminatory and other illegal credit practices." Banks are granted an extended timeline to comply with the final rule compared to the initial 12-month proposal, with reporting requirements set to take effect in 2027.

"In light of the evolution in the banking sector, modernizing the CRA is long overdue," said NBA Chair Lydell Woodbury (First Nebraska Bank). "While the industry appreciates the regulators' efforts in this regard, with more than 1,500 pages to digest, the proposal will take time to review and fully understand the impact on Nebraska banks."

Your NBA government relations team is currently reviewing the final rule to ensure that the proposed changes do not impose an undue burden on NBA-member banks. We value the input and feedback from our members on the impact of the final rule. Please do not hesitate to reach out with your questions and comments to Richard Baier at the NBA at [email protected] or 402-474-1555.

Read the Final Rule

Read the Fact Sheet

Legislative, Policy & Regulatory Updates

Fed Proposes Changes to Debit Interchange Fees

Today, the Fed proposed lowering debit interchange fees to 14.4 cents plus an additional .04% of the transaction amount, while increasing the fraud-prevention adjustment to 1.3 cents. Currently, the interchange fee is 21 cents, plus an additional .05% of the transaction amount and a 1-cent fraud adjustment. The proposal also includes a provision to adjust the fees every other year. The adjustments would be based on data from a biennial survey of large debit card issuers. The proposal would take effect June 30, 2025.

Read the Proposed Rule

CFPB Unveils Proposed Rule for Consumer Financial Data Sharing

The Consumer Financial Protection Bureau (CFPB) has introduced a proposed rule regarding consumer-authorized financial data sharing. The rule, based on Section 1033 of the Consumer Financial Protection Act of 2010 (CFPA), prohibits companies from charging consumers for accessing their financial data electronically. It grants consumers the legal right to access data associated with their credit card, checking and digital wallet accounts. In addition, the proposed rule aims to prevent companies from exploiting consumers' financial data for their own gain, such as through targeted advertising. Consumers can revoke access, and companies must default to deleting shared data. The rule also bans "screen scraping" data collection and promotes fair and inclusive industry standards. The agency said the rule would “accelerate a shift toward open banking.” 

Read the Proposed Rule

Comment Period Extended on Proposed Capital Requirements 

Last week banking industry regulators extended the public comment period on the proposed capital requirements for banks with more than $100 billion in assets. Comments on the “Basel III endgame” implementation proposal are now due Jan. 16, 2024. In addition, the Fed announced it would collect more data from banks affected by the proposal.

Read the Notice

FDIC Proposes Rule to Update Hiring Requirements for People with Criminal Histories 

Yesterday, the FDIC issued proposed rulemaking to implement the Fair Hiring in Banking Act which eases restrictions on hiring people who have a criminal background to work in banks.

Read the Proposed Rule

Review Alliance

Did you know that there are common red flags for financial elder abuse?

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Compliance Alliance

Q: We have a loan that was locked at 7.25% and disclosed on the LE at 7.25% but mistakenly changed to 7% on the Initial CD and then corrected on the Final CD back to 7.25%. Does the bank need to honor the 7% or can the loan close with 7.25%?

Learn the Answer

An upcoming webinar will focus on small business lending products, resources and best practices from the U.S. Small Business Administration, the Nebraska Business Development Center and banks to help veterans access affordable credit and capital to establish businesses. The webinar will also cover small business lending activities that may potentially receive CRA consideration, provide information about resources to veterans, and inspire new collaborations and partnerships to assist with the establishment and continued success of veteran-owned businesses. The webinar will be Nov. 9 from 11:00 a.m. to 12:30 p.m. CST. 

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