Federal Regulators Finalize CRA Changes

Federal regulators announced in March final guidance implementing changes to Community Reinvestment Act (CRA) regulations.

Among other things, the changes clarify that regulators will consider bank activities in designated disaster areas for CRA credit. Bank loans, investments and services that help attract new, or retain existing, businesses or residents to a designated disaster area will receive CRA "community development" consideration for a 36-month period after designation of the area. This time period can be extended in unusual cases, and the agencies indicated they plan to substantially extend the time periods in the Gulf Coast areas hit by hurricanes Rita and Katrina.

The changes also address the availability of CRA "community development" consideration for bank activities that revitalize or stabilize underserved or distressed middle-income rural areas. The other major issue it addresses is implementation of the new community development test for banks with assets between $250 million and $1 billion.

The guidance is being issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. The guidance implements changes to the agencies' CRA regulations that took effect on Sept. 1, 2005.