Earlier today, the Office of the Comptroller of the Currency (OCC) finalized their overhaul of the Community Reinvestment Act (CRA) regulations. Although the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) released a proposed CRA rule together, the FDIC noted that they are not prepared to finalize a CRA proposal at this time, meaning the FDIC’s final rule may differ from the OCC’s. Moreover, the Federal Reserve, also responsible for governing the CRA, was not involved in the proposed rule.
The CRA is a critical tool that encourages banking and lending institutions to lend necessary funding to affordable housing and community development projects by receiving favorable CRA consideration for community development activities. These activities include investment in Low-Income Housing Tax Credit (LIHTC) projects, New Market Tax Credit (NMTC) projects, and historic rehabilitation tax credit projects. Virtually no affordable rental housing development would occur without LIHTC, and the CRA is critical to ensuring banks remain motivated to invest in LIHTC.