The proposed Community Reinvestment Act (CRA) rule would change how banks earn credit for community development activity outside their current assessment areas. The agencies would unlock that flexibility using a numerical threshold far below what large banks do today. The risk is that a benchmark created only to determine when outside-area activity can count becomes the de facto standard banks use to judge whether they have done enough community development.
Under proposed Option 1 of the CRA rules released for public comment in August by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), a large bank would generally qualify for broader geographic consideration of community development (CD) loans after meeting a benchmark equal to 0.625% of Tier 1 capital allocated to its assessment areas. The same 0.625% benchmark would apply separately to CD investments and grants. The agencies describe these standards as establishing the level of activity a bank must conduct before activity outside its assessment areas can receive consideration.[1] Tier 1 capital is a measure of a bank’s core financial strength, made up primarily of common equity and retained earnings.
The agencies also emphasize an important limitation: meeting the threshold would not determine the bank’s CRA rating. They state that the geographic-flexibility standards are a minimum threshold for broader consideration and “are not a sufficient basis for concluding on a bank’s CD performance in an assessment area.” Examiners would still consider responsiveness to community needs and the other factors used to evaluate CD performance.[2]
That formal distinction, however, may be difficult to maintain in practice.
A regulatory floor could become the industry’s target
The proposal does not formally make 0.625% a passing CRA score. But by putting that number in the rule and describing it as the minimum needed to avoid a “Needs to Improve rating,”[3] the agencies risk turning it into the benchmark banks use to judge whether they have done enough.
The agencies state that their proposed quantitative standards “generally reflect the minimum level of CD activity, absent consideration of other factors, that a bank would be expected to conduct to avoid a “Needs to Improve” rating.”[4] The proposal also allows examiners to let a bank qualify for geographic flexibility with less than the quantitative standard, but not to require more.[5] A bank compliance officer or CRA manager therefore would have something that does not exist in the current rule for ordinary large banks: an official regulatory number associated with the minimum level of acceptable community development activity.
NCRC’s review of recent CRA examinations illustrates why this matters. The dataset includes the 100 largest banks and derives CD lending and investment activity directly from their most recent CRA performance evaluations. The analysis of the proposed Tier 1 benchmark covers the 69 OCC- and FDIC-supervised banks in the sample and isolates for activity occurring inside their assessment areas.
Those 69 banks currently conduct approximately $59.1 billion per year in assessment-area CD lending and $42.9 billion in qualified investments and grants, or about $102 billion combined. Applying the proposal’s exact 0.625% Tier 1 benchmark to the same banks produces approximately $7.4 billion in each category, or $14.8 billion combined – about 85% below current levels.[6]
Separate bank capital proposals issued in March 2026[7] could push that benchmark lower still. Those proposals would reduce the amount of Tier 1 capital many banks are required to hold. If banks respond by holding less, the dollar amount represented by the August 2026 CRA proposal’s 0.625% benchmark for community development lending and investments would fall with it.
The median comparison is even more revealing. For the banks in NCRC’s sample, current annual assessment-area CD lending equals approximately 6.83% of Tier 1 capital at the median, nearly 11 times the proposed 0.625% benchmark. Qualified investments and grants equal approximately 3.58% at the median, nearly six times the benchmark. We calculated these figures from recent CRA performance evaluations, the time frames of which vary by institution, and then annualized for comparability.[8]
The danger is therefore an anchoring effect. A bank currently conducting activity well above 0.625% could reasonably ask why it should continue doing many multiples of a threshold that regulators themselves describe as reflecting the historical minimum necessary to stay above “Needs to Improve.” Banks could increasingly budget, negotiate and defend their CRA programs around the regulatory number. Examiners would retain authority to demand better performance based on community needs, but they would be doing so against a newly established benchmark that banks could repeatedly invoke. A numerical floor can become a ceiling even when the regulation says it is not one.
Foreign deposits could push an already-low benchmark even lower
Option 1 contains another provision that could push the effective threshold lower. The agencies propose to allow examiners, based on performance context, to determine that a bank conducting a lesser dollar amount of CD activity nevertheless qualifies for consideration of activities outside its assessment areas. But the discretion runs only one way: the agencies state that examiners would not be permitted to require a higher amount than the quantitative standard for purposes of geographic flexibility.[9]
The agencies then specifically ask whether they should develop standards for determining when Tier 1 capital is an insufficient measure of a bank’s capacity, giving as an example a bank with “a large amount of foreign deposits.”[10]
The underlying issue appears to concern internationally active banks. A large global bank might argue that its consolidated Tier 1 capital supports both its domestic and foreign businesses and therefore overstates the amount of capital that should be treated as relevant to its US CRA capacity. If regulators accept that argument, the bank could qualify for geographic flexibility with less activity than the already low 0.625% benchmark would otherwise require. This matters because the proposal would then establish an even lower regulatory reference point for some banks. If 0.625% already risks becoming a de facto target for community development performance, allowing certain banks to qualify below 0.625% could push that target lower still.
That deserves particular scrutiny given NCRC’s findings. The proposed benchmark is already far below current assessment-area activity among the OCC- and FDIC-supervised banks examined. Allowing internationally active banks to discount that benchmark further could widen the gap.
A large international bank remains a single consolidated institution with substantial capital and access to funding. If the agencies believe consolidated Tier 1 capital systematically overstates domestic CRA capacity, they should identify the economic relationship, provide a transparent methodology for calculating the adjustment and quantify which banks would benefit and by how much.
[1] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52139
[2] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140
[3] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140.
[4] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140.
[5] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140.
[6] NCRC Research analysis of the most recent publicly available CRA Performance Evaluations for 69 of the 100 largest U.S. banks supervised by the OCC or FDIC (analysis dated Aug. 28, 2026). NCRC extracted community development lending and qualified investment figures from each bank’s performance evaluation, separated activity occurring within the bank’s assessment areas from broader-area activity, and annualized the figures based on each bank’s evaluation period, which ranged from two to five years. Qualified investments include grants and donations where the performance evaluation reports them together. The 69 banks conducted approximately $59.1 billion in annualized assessment-area CD lending and $42.9 billion in annualized assessment-area qualified investments, or $102.0 billion combined. NCRC modeled the proposed geographic-flexibility benchmark by applying 0.625% to the Tier 1 capital of the same banks, producing approximately $7.4 billion in each category, or $14.8 billion combined. Federal Reserve-supervised banks were excluded from this analysis.
[7] Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation & Office of the Comptroller of the Currency, “Agencies Request Comment on Proposals to Modernize the Regulatory Capital Framework and Maintain the Strength of the Banking System” (Mar. 19, 2026).
[8] NCRC Research analysis of the most recent CRA Performance Evaluations for 69 of the 100 largest U.S. banks supervised by the OCC or FDIC (Aug. 28, 2026). NCRC annualized each bank’s assessment-area community development lending and qualified investment activity over its CRA evaluation period and calculated each amount as a percentage of the bank’s Tier 1 capital. The median annual ratios were approximately 6.83% for CD lending and 3.58% for qualified investments. Evaluation periods ranged from two to five years; banks with missing underlying data were excluded from the relevant median rather than treated as zero. Federal Reserve-supervised banks were excluded from the median analysis.
[9] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140.
[10] Community Reinvestment Act Regulations, 91 Fed. Reg. 52114, 52140.
