US bank regulators have unveiled sweeping proposed changes to the Community Reinvestment Act, a Civil Rights-era law governing how banks serve low- and moderate-income communities, in what would be the first significant revision of its rules in nearly three decades.
The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation jointly announced the proposal on Friday. The 1977 law requires regulators to document how effectively banks lend to low-to-middle income neighborhoods, a benchmark long viewed as central to expanding access to credit.
Under the revisions, examiners would place greater emphasis on the volume and quality of lending in specific communities and geographies, and less on the number of branches a bank opens or the deposits it collects from a given area.
The proposal would also sharply narrow the pool of institutions subject to the law’s full requirements. The threshold defining a small bank would rise from those holding under $412 million in assets to those with up to $1 billion. Banks with between $1 billion and $10 billion in assets would be reclassified as intermediate institutions.
The shift is expected to reduce the number of banks required to comply with parts of the act by roughly 800. Only about 86 institutions, or approximately 3% of all banks, would remain subject to the law’s fullest requirements under the new framework.
Another provision likely to draw scrutiny concerns how banks channel funds to community development organizations. The act currently allows banks to donate to local groups focused on poverty relief and affordable housing as evidence of their community investment. The proposed rules could narrow the range of eligible groups and programs.
Supporters of the changes argue that the current standards impose outdated compliance burdens that reflect an era of branch-based banking rather than today’s digital lending landscape. Consumer advocacy groups, including the National Community Reinvestment Coalition, have historically opposed measures that reduce the scope of institutions covered by the law, warning that such moves could weaken protections for underserved neighborhoods.
The move comes amid broader scrutiny of the US financial system’s regulatory framework, following earlier reviews in which supervisors flagged shortcomings in the resolution plans of major lenders.
The proposal now enters a public comment period, during which banks, community organizations and lawmakers are expected to weigh in before any final rules take effect. The outcome could reshape how billions of dollars in lending and community investment are directed across the United States in the years ahead.