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    US Agencies Propose Changes to CRA Regulations

    May 24, 2022

    The Board of Governors of the Federal Reserve System (FED) approved merger and acquisition applications involving Texas State Bankshares, Inc., Texas Regional Bank, Alerus Financial Corporation, and MidWestOne Financial Group, Inc. Additionally, the US regulatory agencies are seeking feedback, until August 05, 2022, on a proposal to strengthen and modernize the regulations implementing the Community Reinvestment Act (CRA).

    The US agencies seek feedback on changes to update and clarify the regulations to implement the CRA and proposed a new evaluation framework for evaluating CRA performance for banks that would establish the following four tests for large banks—Retail Lending Test, Retail Services and Products Test, Community Development Financing Test, and Community Development Services Test. Intermediate banks would be evaluated under the Retail Lending Test and the status quo community development test, unless they choose to opt into the Community Development Financing Test. Small banks would be evaluated under the status quo small bank lending test, unless they choose to opt into the Retail Lending Test. Wholesale and limited purpose banks would be evaluated under a tailored version of the Community Development Financing Test. The proposal aimed at updating the CRA regulations involves:

    • updating CRA regulations to strengthen the achievement of the core purpose of the statute
    • adapting to changes in the banking industry, including the expanded role of mobile and online banking
    • providing greater clarity and consistency in the application of the regulations
    • tailoring performance standards to account for differences in bank size and business models and local conditions
    • tailoring data collection and reporting requirements and use existing data whenever possible
    • promoting transparency and public engagement
    • confirming that CRA and fair lending responsibilities are mutually reinforcing
    • creating a consistent regulatory approach that applies to banks regulated by all three agencies


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    Keywords: Americas, US, Banking, Mergers and Acquisitions, Community Reinvestment Act, Lending, Small Banks, Retail Lending, Reporting, US Agencies, FED, FDIC, OCC

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