The Proposed 2026 CRA Rollbacks: Key Takeaways and Why it Matters

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation’s (FDIC) proposed Community Reinvestment Act (CRA) rule would weaken bank obligations to invest, lend and provide services in low- and moderate-income (LMI) communities, while reducing transparency and accountability.

The Proposal:

1. Uses the courts to narrow CRA and restrict future modernization.

In conjunction with the proposed rule, the OCC and FDIC continue their efforts through the judicial system to narrow the scope of the CRA. On a parallel track, the agencies are seeking court decisions that would ensure that no future rule can examine lending beyond banks’ footprints or evaluate deposit products, binding future administrations.
Why this matters: The supposedly “technical” changes in the proposed rule provide cover for a much broader and bolder attempt to permanently limit CRA’s reach through the courts.

2. Eliminates or weakens CRA requirements for hundreds of banks by raising asset thresholds.

The proposed rule raises the asset thresholds under CRA significantly:

Banks with less than $1 billion in assets would be treated as small banks, up from the current threshold of $412 million.
Banks with between $1 billion and $10 billion would be treated as intermediate banks rather than large banks.

Only banks with more than $10 billion in assets would remain subject to the full large-bank CRA examination compared with the current threshold of $1.65 billion.

Bank Size	Current Rule (1995)	Proposed Rule (2026)
Small	<$412 million	<$1 billion
Intermediate	>$412 million to $1.649 billion	>$1 billion to $10 billion
Large	>$1.649 billion	>$10 billion

Under the proposed rule, banks between $1.649 billion and $10 billion would no longer receive the full large-bank examination threshold with separate lending, investment and service tests, reducing scrutiny of branches, community-development investments and banking services. Additionally, 417 banks between $412 million and $1 billion would no longer have a separate community development test – only a lending test – and would no longer be required to report small business lending.
Why this matters: Raising the asset thresholds result in hundreds of banks no longer have obligations to report their investments, services and small business loans, likely resulting in significant reductions in activities serving low- and moderate-income people.

3. Puts thousands of branches in underserved communities at greater risk.

Raising the large-bank threshold to $10 billion would eliminate separate branch evaluations for 417 banks. More than 5,000 branches in low- and moderate-income census tracts — 30% of all LMI branches nationwide — and more than 4,000 branches in majority-people-of-color census tracts — 23% of all such branches —would lose these needed accountability measures.
Twenty-eight states would lose evaluations for at least one-third of their LMI-area branches, with 22 states in danger of losing them for at least one-third of branches in majority-people-of-color tracts.
Why this matters: Banks began closing branches at a dramatic pace following the COVID-19 pandemic. CRA’s branching obligations are a major reason that banks have maintained the share of their branches located in LMI communities at relatively steady levels — roughly 24% nationwide. Without branch evaluations, the number and share of branches maintained by affected banks in LMI areas could decline precipitously.

4. Puts affordable housing and community development investment and financing at risk, especially in smaller markets.

The proposal would raise the small bank threshold from $412 million to $1 billion, eliminating community development evaluations for roughly 814 banks, or about 40% of the banks currently subject to that requirement.
Sixteen states will lose a third of the banks currently evaluated for reinvesting in local community development projects. For example, Iowa will go from having 109 of their banks evaluated for community development to just 63, with Louisiana’s number dropping from 62 banks to only 32.
The share of the all banks with community development responsibilities would fall from roughly half to less than one-third. This risks losing over half a billion per year in community development loans and investments.
The proposal would reclassify another 417 banks by raising the intermediate bank threshold from $1.649 billion to $10 billion. This would eliminate the separate investment and service tests and combine community development loans, investments and services into one evaluation, reducing their distinct scrutiny purposes. As a result, only the largest 6% of banks would face separate reviews of their community development loans/investments and branch services or of their CRA small-business loan reporting requirements.
The proposal further contemplates raising the large bank threshold to $30 billion and the small bank threshold to $10 billion in Question 1 of the proposal. If finalized, this would jeopardize over $26 billion in community development loans and $267 million in investments per year. 42 states would have their number of banks with local community development requirements cut in half or more, with 21 states losing two-thirds of the banks required to reinvest in local community development.
As detailed below, the proposal combined with an earlier proposal seeks to give banks the option to significantly reduce their community development loans and investments under the Strategic Plan option.
Why this matters: This will likely reduce demand for Low-Income Housing Tax Credits (LIHTC), which will potentially worsen the housing crisis. Congress previously expanded the supply of LIHTC, with the 21st Century ROAD to Housing Act increasing the cap that banks may invest in public welfare projects such as LIHTC from 15% to 20% of their capital and surplus. Such an increase in supply may mean little if the demand is not there because over 800 banks no longer have community development requirements, with another 400 no longer being separately evaluated for investments.

5. Undermines the financial health of unbanked and underbanked communities.

Under the current large bank service test, examiners consider retail banking services broadly, including branch delivery systems and the range of services offered. The proposed rule would restrict the service test to credit services and exclude deposit services, such as checking and savings products, from CRA consideration.
For large banks still subject to the service test, examiners would no longer evaluate whether checking and savings accounts are affordable, reducing incentives to offer the basic products that help unbanked and underbanked households.
Why this matters: According to the FDIC, 5.6 million households, or 4.2%, remain unbanked, while an additional 14.2% — more than 19 million households — are underbanked. CRA review of the cost and features of deposit products has played an important role in encouraging banks to address these disparities.

6. Changes the definition of economic development by removing its focus on working-class people and communities.

The proposal would also weaken the standard for earning CRA credit for economic development activities. Under current guidance, an activity must generally satisfy both a size test and a purpose test, including showing that it creates, retains or improves jobs for low- and moderate-income people, benefits low- and moderate-income areas or works through qualifying intermediaries. The proposal would eliminate the purpose test, allowing banks to receive CRA credit for business financing without showing that it creates, preserves or improves jobs for low- and moderate-income people or in low- and moderate-income communities.
Why this matters: By removing the focus on LMI communities, the proposal could allow a bank to receive CRA credit for financing a limited liability company (LLC) established by a wealthy business owner in an upper-income census tract — even if the business creates no jobs for low- and moderate-income people.

7. Expands CRA credit for infrastructure projects without requiring substantial benefits for working-class people or communities.

Under current guidance, infrastructure projects in an LMI area generally receive CRA credit only when they help keep or attract residents or businesses. The proposal would?change the standard by allowing credit for infrastructure that “benefits or serves” a targeted area, even when the project delivers little meaningful benefit to LMI residents and does not help preserve or strengthen the community.

Why this matters: A bank could seek CRA credit for financing a large regional infrastructure project that only incidentally serves an LMI neighborhood, even if most of the project’s benefits flow to affluent communities or private companies. For example, a data center located in or connected to an LMI tract could qualify despite creating few permanent jobs and providing little direct benefit to residents.

8. Allows banks to use their strategic plan to do significantly less for communities.

The proposed rule allows the regulators to coach banks on the adequacy of their proposed goals before the public ever sees them, diminishing the importance of the public comment process and allowing banks that miss their self-selected goals to fall back on the regular CRA test after failing on their strategic plan.
The proposed rule also contains a general encouragement for more banks to use the Strategic Plan option, even as the OCC has dramatically lowered the levels of community development lending and investing needed to pass the examination. Earlier this year, the OCC proposed treating annual community development loans and investments equal to just 0.12% to 0.24% of assets as “Satisfactory” and 0.20% to 0.40% as “Outstanding.”
Why this matters: Taken together, the rule and the OCC’s earlier Strategic Plan guidance could let banks commit substantially less to communities while still earning passing, or even outstanding, CRA ratings. NCRC found historical medians of 0.70% for OCC-supervised banks with assets of $30 billion or less and 0.64% for banks with assets of $1 billion or less. NCRC estimates that nearly $100 million a year in community development financing could be lost if only 10% of banks performing near the median reduced their activity to the OCC’s 0.24% benchmarks.

9. Makes CRA easier to game by narrowing what gets examined and broadening what gets credit.

Under the current rule, large banks are generally evaluated on their home mortgage, small business and small farm lending, even when one is not a major part of the bank’s business. The proposal would instead focus on products designated as the bank’s “major product lines” based entirely on lending volume under one option and partly on lending volume under the other. This could allow weak performance in a lower volume product to escape meaningful scrutiny even when that credit is important locally.
The proposal continues to allow banks that meet a minimum standard in their assessment areas where they can cherry-pick qualifying community development activities conducted elsewhere for additional CRA credit without imposing a corresponding obligation to serve or be evaluated across the full geography of their lending or business operations.
Why this matters: These provisions must be read alongside the OCC and FDIC’s narrow legal theory about CRA’s reach. The agencies are proposing to apply CRA narrowly when deciding what banks must be evaluated on but broadly when deciding what banks may count for credit. That lets banks avoid scrutiny for weak performance in some products and places while receiving credit for activities elsewhere — making it easier to earn a favorable CRA rating without fully serving their communities.

10. Hides lending gaps and makes banks harder to hold accountable.

Under the current rule, banks above the large bank threshold generally collect and report data on small business loans, small farm loans, community development loans and assessment areas. The proposal would limit these requirements to banks with more than $10 billion in assets. Banks with assets of $10 billion or less would no longer be required to collect and report CRA data on small business loans, small farm loans, community development loans and assessment areas.
The proposal would eliminate 11% of CRA small business lending data nationwide. Six states — Iowa, Louisiana, Maine, Mississippi, North Dakota and South Dakota — would lose nearly one-quarter of their data.
Why this matters: Without meaningful data, communities, regulators and researchers would have less information to identify credit deserts, compare bank performance or understand whether local credit needs are being met.

11. Restricts CRA credit for grants that pay basic nonprofit operating costs.

Under current rules, banks can receive CRA credit for grants that primarily support community development, which can include general operating support. The proposal would require the grant funds to be tied to a specific community development project or program. For banks over $10 billion, in addition to having grant funding tied to a specific project, no more than 15%of the grant could go toward administrative or indirect costs.
Under Question 10, the proposal asks whether the agencies should eliminate CRA credit for all grants and donations altogether, leaving open the possibility that the agencies could adopt that approach in the final rule.
Why this matters: Nonprofits need flexible funding to pay staff, keep programs running and adapt to changing community needs. The proposal could discourage banks from providing that support, especially to smaller organizations. For example, a large bank would receive no CRA credit when 25% of the grant covers “internal expenses,” even though the remaining 75% pays direct service costs. This will force nonprofits to divert more time to chasing project-specific grants instead of offering critical CRA-eligible community development services, such as helping families become first-generation homeowners, providing technical assistance to small businesses or training people on the skills needed for high-paying jobs. Less flexible funding also makes nonprofits more susceptible to economic downturns by making it more difficult to cover fixed overhead costs when there are drops in other revenue streams.