Federal Agencies Move to Rescind 2023 Community Reinvestment Act Regulations

In a recent article by Max Bonici, Stephen T. Gannon, and Sam Taxy of Davis Wright Tremaine, the authors outline how the Federal Reserve, FDIC, and OCC jointly issued a Notice of Proposed Rulemaking (NPRM) in July 2025 to formally rescind the 2023 amendments to the Community Reinvestment Act (CRA) regulations. Since those Biden-era reforms were enjoined by a federal court before taking effect, the NPRM would preserve the 1995 regulatory framework currently in place. According to the authors, this move maintains the status quo while addressing ongoing legal uncertainty and industry concerns about increased compliance costs.

The Community Reinvestment Act, enacted in 1977, requires federal banking regulators to assess whether institutions meet the credit needs of low- and moderate-income communities in their designated assessment areas. As the authors explain, CRA ratings are a key factor in evaluating proposed mergers and expansions. 

The 2023 rule, finalized by federal agencies but never implemented, would have significantly altered these evaluations by redefining assessment areas to include non-branch-based lending and by introducing more stringent performance benchmarks. The authors note that these changes could have sharply increased compliance obligations and negatively impacted CRA ratings across the banking sector.

The authors conclude that the proposed rescission offers regulatory clarity for now but does not foreclose future reform. Digital banking trends and broader questions about how to measure community impact remain unresolved. Compliance professionals should anticipate continued attention to CRA modernization and remain agile in adapting to evolving regulatory expectations, even under a restored 1995 rule framework.