Federal Regulators Signal Reversal On 2023 CRA Modernization Rule

On March 28, the Federal Reserve, FDIC, and OCC jointly announced plans to rescind 2023 revisions to the Community Reinvestment Act (CRA) regulations. The agencies stated they would return to the previous regulatory framework existing before the 2023 revisions (See our prior discussion here).

The 2023 revisions to the CRA, finalized under the Biden administration, sought to modernize the CRA framework in response to digital banking trends. However, many banks criticized these changes on the grounds that the revised rules exceeded the boundaries of the CRA, imposed enormous costs on banks, and were more likely to reduce lending to low- and moderate-income borrowers. (See our discussion hereon challenges to the rule.)