OCC, FDIC propose another CRA revamp

Federal regulators are proposing a significant overhaul of the Community Reinvestment Act (CRA), which could change how banks support lending in local communities. For retailers and service providers, the CRA is the engine that often pushes banks to approve more consumer loans and provide credit to diverse neighborhoods. The new proposal from the OCC and FDIC aims to reduce the data collection burden on smaller banks. While this sounds like a win for efficiency, it could lead to less transparency regarding where credit is being deployed in your local market. Another key shift involves limiting bank grants to community groups. If these groups are the ones helping your customers build credit or providing financial literacy, their reduced funding could impact your customers' ability to qualify for financing. The proposal also seeks to redefine what counts as a 'community development' activity. For merchants, any change to the CRA is worth watching because it directly influences bank 'appetite.' When CRA rules are strict, banks are often more aggressive in finding ways to say 'yes' to consumer loan applications in underserved areas to meet their quotas. If these rules are relaxed or shifted, you might see a slight tightening of credit availability for customers who don't have top-tier credit scores.

Source: Banking Dive

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