Episode 131: OCC and FDIC Propose Major CRA Threshold Overhaul

The OCC and FDIC have proposed sweeping changes to Community Reinvestment Act bank size thresholds that could remove 416 banks — a 61% reduction — from the large bank category subject to the CRA investment test. Since the CRA incentivized roughly 80% of Housing Credit equity investment in 2024 (just over $23 billion), the proposal carries major implications for LIHTC equity supply, syndication volume, and affordable housing production broadly. Key Takeaways: The proposed small bank threshold rises from $412 million to under $1 billion (lending test only); small banks are not subject to the investment test. A new "intermediate bank" tier ($1B–$10B) replaces intermediate small banks, subject to lending and community development tests only — not the investment test. The large bank threshold rises from $1.649 billion to $10 billion, removing approximately 416 banks (61%) from the investment test requirement. The CRA incentivized ~80% of Housing Credit equity investment in 2024, totaling just over $23 billion, according to a new NAAHL report. From 2015–2022, the Housing Credit comprised 79% of OCC-regulated bank public welfare investments — $95 billion total. Regulators are also soliciting comment on alternative thresholds: an intermediate bank floor of $3.252 billion, an intermediate ceiling of $30 billion, and a small bank ceiling of $10 billion. The Federal Reserve is not party to this proposal, creating the possibility of divergent CRA frameworks across different bank regulators. The comment period opens 60 days after Federal Register publication; NH&RA is coordinating an industry response. This proposal arrives at a moment of significant housing affordability stress and represents one of the most consequential potential changes to the CRA investment framework in decades. LIHTC syndicators, equity investors, and affordable housing lenders with bank partners in the $1.649 billion to $10 billion asset range should assess their exposure and engage the comment process. The Federal Reserve's absence from the rulemaking also raises the prospect of regulatory fragmentation that could complicate multi-bank capital stacks going forward. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.