For Immediate Release:
July 31, 2026
Contact:
Robert Mayo | hello@woodstockinst.org
CHICAGO – Today, two federal agencies released a proposed rule that would dramatically reduce community development lending and investment requirements for banks with less than $10 billion in assets—about 96% of all banks.
These longstanding requirements incentivize banks to engage in lending and investment activities that meaningfully address communities’ unique financial needs, including lending to small businesses in low- and moderate-income areas, lending to small farms in rural areas that otherwise struggle to fulfill their credit needs, and financing affordable housing developments that could ease the strains on the housing market and expand homeownership opportunities.
In 1977, Congress passed the Community Reinvestment Act (CRA) as a direct response to financial institutions’ decades of redlining and intentional exclusion of certain neighborhoods from economic opportunity. The CRA obligates banks to actively reinvest in the communities where they take deposits by requiring regulators to examine banks’ lending activity, service offerings, and investments that are responsive to the financial service needs of the communities they are chartered to serve.
In response, Jane Doyle, Director of Policy & Advocacy at Woodstock Institute, said,
“Once again, the administration that promised to solve the affordability crisis has instead taken drastic action to undermine urgently needed development in lower-income communities, many of which never recovered from the 2008 subprime meltdown. Lessening CRA obligations puts at risk billions of dollars of investment in low- and moderate-income communities. The impact of this proposal will manifest as unbuilt affordable housing projects, shuttered small businesses, and accelerated disrepair and vacancy in lower-income communities.
“Given that Congress just passed legislation that encourages banks to make more public welfare investments in housing, this proposal directly contradicts what legislators on both sides of the aisle claim to want for their communities: abundant and affordable housing. Instead of indiscriminately deregulating banks, the government should be working with financial institutions to finance the infrastructure and community development so many neighborhoods desperately need.”
The new CRA rule proposed today by the Office of the Comptroller of the Currency (OCC) and FDIC would replace the 1995 rule that is currently in place. The Biden Administration had released a proposed rule in 2023 designed to modernize the regulations, but it was rescinded by the Trump Administration after an embattled lawsuit. Notably, the Federal Reserve Board of Governors did not join the OCC and FDIC in issuing today’s proposed rule.
###
Woodstock Institute is a leading policy and research nonprofit that advocates for consumer financial protection and community economic development. Our work seeks to combat structural inequities and improve the quality of life in lower-income neighborhoods and communities of color. Among our areas of focus are predatory lending, access to banking, debt collection, and municipal fines and fees.
