Community Opportunity Alliance

A Preliminary Analysis of the 2026 CRA Proposed Rule

What is at stake for community development organizations and the communities they serve

By Frank Woodruff
August 7, 2026

On July 31, 2026, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) released a proposal to revise Community Reinvestment Act regulations. The Federal Reserve did not join the proposal. Comments are due 60 days after publication in the Federal Register.

This preliminary analysis focuses primarily on the parts of the proposal most directly tied to COA’s work and our members’ experience: banks’ community development responsibilities and the community development tests. Changes to the retail test and to how regulators evaluate banks’ product lines are important, but they are not our primary area of expertise. We will leave detailed analysis of those provisions to organizations with deeper experience in retail lending and bank product evaluation.

COA’s preliminary view: The proposal would narrow bank accountability and weaken the community development infrastructure that helps capital reach low- and moderate-income (LMI) people and places. Modernization should make CRA more responsive to how banks operate today, not reduce responsibility or transparency. Over the next 60 days, we look forward to working with members to test and refine these conclusions and develop the full Technical Comment Letter COA will submit to regulators.

Six concerns will guide our review

1. Community needs should drive CRA credit.

The proposal would clarify and expand categories of qualifying activities, but eligibility alone is not enough. The largest factor in CRA consideration should be the extent to which an activity responds to documented LMI community needs and produces meaningful benefits. Broad or preferred categories should not allow incidental benefits, financing volume, or a project label to substitute for impact.

2. CRA responsibility must follow modern banking activity.

A branch-based framework no longer captures where many banks take deposits, make loans, and build market share. Yet the proposal does not meaningfully modernize assessment areas, a significant shortcoming. COA has supported retail lending assessment areas (RLAAs) as one practical way to establish responsibility where a bank has substantial lending activity outside its branch footprint. RLAAs are not the only approach worthy of consideration, however. The final framework should evaluate the available options and ensure that community development responsibility follows a bank’s meaningful market activity, wherever that activity occurs.

3. Higher asset thresholds would be a major step backward.

The proposal would classify banks below $1 billion as small and banks from $1 billion to $10 billion as intermediate. Many banks currently treated as large would become intermediate and could lose separate investment and service tests, while hundreds of smaller institutions could lose a distinct community development evaluation. That significant reduction in community development responsibility is a step backward, especially in rural areas, smaller cities, and markets where intermediate banks are leading community development partners.

4. The grant restrictions misunderstand how community development works.

The proposal would limit CRA consideration to grants directly used for a specific plan, project, or initiative and require large banks to document that recipients’ overhead does not exceed 15 percent. It also asks whether grant consideration should be eliminated. Flexible grants sustain staff, partnerships, statewide and regional infrastructure, and capacity building. These larger systems make individual transactions possible and help the field evolve, mature, and innovate over time. Grants also support the local and regional organizations banks rely on to identify community needs, understand the markets where they invest, and build effective community development strategies. The proposed recipient-level data collection would burden banks and nonprofits without demonstrating greater community benefit.

5. CRA cannot address redlining while ignoring race.

Income and race are not interchangeable. A credible CRA framework should use available data to reveal racial disparities in access to mortgage, small-business, consumer, and community development credit; incorporate that information into performance context and impact review; and coordinate CRA with fair lending enforcement.

6. The banking agencies must act together.

The OCC and FDIC proposal would create different standards for similarly situated banks based on charter and regulator. Fragmentation creates confusion for banks and communities, weakens accountability, and invites regulatory arbitrage. The OCC, FDIC, and Federal Reserve should develop a consistent interagency framework.

What the proposal would change

Issue	From: current rule	To: proposed rule
Bank size and tests	Banks below $412 million receive the streamlined small-bank lending test. Intermediate small banks, from $412 million to $1.649 billion, receive a lending test and a separate community development test. Banks at or above $1.649 billion receive separate lending, investment, and service tests.	Banks below $1 billion would be small; banks from $1 billion to $10 billion would be intermediate; and only banks above $10 billion would be large. Many banks now evaluated as large would lose separate investment and service tests, and some smaller banks would lose a distinct community development evaluation.
Assessment areas	Assessment areas are generally tied to a bank’s main office, branches, deposit-taking ATMs, and the surrounding geographies where it conducts a substantial portion of its business.	The branch-based approach would remain largely intact. The proposal does not create a meaningful way to assign responsibility in markets where banks have substantial activity but no physical branches.
Grants	Qualified investments may include grants and donations that support community development. The rules do not impose a 15 percent recipient-overhead test or require every grant to be tied to one specific plan, project, or initiative.	CRA consideration would be tied to a specific community development plan, project, or initiative. Large banks would have to document that a grant recipient’s overhead does not exceed 15 percent. The agencies also seek comment on eliminating grant consideration entirely.
Services	The large-bank service test considers both retail banking services and community development services, including the availability and effectiveness of delivery systems.	The large-bank service test would focus on credit services and exclude deposit services, narrowing the range of services considered.
Data and retail review	Large banks are subject to CRA data collection and reporting requirements, and retail lending performance is evaluated across relevant lending activity.	Banks newly reclassified as intermediate would receive reduced data collection and reporting requirements. Retail review would focus on a bank’s “major product lines.” COA will rely on organizations with deeper retail expertise for detailed analysis of this change.
Eligible activities	The rules use broad community development definitions, supported by interagency guidance and illustrative examples. Activities are evaluated based on the facts and circumstances.	The rules would codify qualifying and non-qualifying examples and revise definitions covering affordable housing, civic assistance, economic development, and revitalization or stabilization.
Agency coverage	The OCC, FDIC, and Federal Reserve operate under a generally consistent interagency framework.	The changes would apply to OCC- and FDIC-regulated banks without participation by the Federal Reserve, creating different standards based on a bank’s charter and regulator.

What COA believes a strong CRA framework should do

Preserve meaningful community development obligations for banks of substantial scale, with requirements calibrated, not erased, for intermediate institutions.
Evaluate banks wherever their lending and business activity creates a meaningful market presence, including through retail lending assessment areas.
Prioritize demonstrated LMI community need and measurable benefit when determining the value of qualifying activities.
Use race-conscious data and analysis to expose disparities and strengthen accountability, consistent with fair lending law.
Recognize flexible grants, operating support, capacity building, and state or regional systems as essential community development infrastructure.
Recognize community development organizations and the state, regional, and national networks that support them as critical partners in building a field that is resilient, impactful, innovative, dynamic, and equipped to work effectively with banks and regulators.
Maintain robust public data, community input, and transparent examinations, under one consistent interagency rule.

Our next steps and how members can help

Over the next 60 days, COA will work with members to turn this preliminary analysis into a detailed Technical Comment Letter and a broader member advocacy effort. Members will have several ways to participate:

Sign-on letters. COA will circulate sign-on opportunities so members can demonstrate broad field support for shared priorities.
Member survey. We will distribute a short survey to gather examples, data, and member perspectives that will directly inform COA’s Technical Comment Letter.
Providence Summit. Members can join the CRA sessions and Comment Lab at the Summit to sharpen our analysis, compare local experience, and begin developing their own comments.
Member toolkit. COA will provide a robust toolkit at the Summit and afterward, including resources for members to write their own letters and help their member community development organizations submit comments as well.

We especially need examples that show how these changes would affect community development partnerships, grantmaking, bank responsibility outside branch footprints, and investment in low- and moderate-income communities. Member experience will be central to the positions COA ultimately submits.