OCC and FDIC propose CRA reforms targeting activist group funding

Key Points:

• The Trump administration's financial regulators, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), proposed changes to the Community Reinvestment Act (CRA) to refocus it on lending and prevent funds from being diverted to left-wing advocacy groups.
• The CRA, originally enacted in 1977 to combat redlining and promote lending in low-income and minority neighborhoods, has faced criticism for being used by banks to fulfill regulatory requirements through donations to activist organizations.
• Comptroller Jonathan Gould and GOP lawmakers praised the reforms, stating the CRA had become an excessive burden on community banks and a tool for funding activist NGOs rather than supporting community investment.
• The proposed rule would ease regulatory burdens on banks with $10 billion or less in assets, focus on credit services rather than deposit services, and streamline CRA evaluation processes to enhance clarity and objectivity.
• Conservative activists and key Republican lawmakers view the changes as restoring the CRA to its original purpose of expanding access to credit and supporting local communities, rather than subsidizing political causes.