A bank with $5bn in assets is a large bank this morning. Under the proposal the OCC and the FDIC filed on Tuesday, it would not be

A bank with $5bn in assets is a large bank this morning. Under the proposal filed on Tuesday it would not be.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation filed a joint notice of proposed rulemaking that would raise the Community Reinvestment Act large bank threshold from $1.649bn in assets to $10bn, lift the small bank ceiling from $412m to $1bn, and rename the intermediate small bank category as the intermediate bank. Comments close 60 days after the notice appears in the Federal Register.

On the FDIC's own count the effect is not marginal. It supervises 2,689 institutions subject to the CRA. Under the proposal the number it examines as large banks falls by 250, to 31, which puts the current figure at 281. Small banks rise by 604 to 2,173. Intermediate banks fall by 354 to 425. The OCC, which supervises 990 institutions and expects to affect about 894 of them, puts its own movements at 126 large banks becoming intermediate and 194 intermediate banks becoming small.

One number in the proposal stops moving with prices. The large bank threshold is adjusted annually for inflation today. Under the proposal it would not be, so the $10bn line would hold in nominal terms while banks grow through it.

The grant rule, and the agencies' own example

The second substantive change is narrower and lands somewhere else entirely.

Grants and donations currently count as qualified investments. Under the proposal a bank could only take CRA consideration for a grant that the recipient directly uses for a program, project or initiative with a primary purpose of community development in the bank's local community. For large banks there is a cap: recipients could spend no more than 15 percent of the money on indirect costs, calculated consistent with the Office of Management and Budget's Uniform Guidance for Federal Awards at 2 CFR Part 200, or a comparable standard.

The agencies illustrate it with a case of their own. A bank recently received CRA consideration for a grant to a community development organisation providing homeownership counselling to low and moderate income individuals and health care to individuals experiencing homelessness. About 25 percent of the grant went to the organisation's internal expenses. Under the proposed rules, the agencies write, that grant would not qualify for a large bank. They say the requirement would help "prevent rent extraction" and keep the money in the bank's communities. No organisation is named, and the document alleges nothing against the recipient.

Large banks would also have to collect proof. The proposal would require them to report community development grants by recipient, location and amount, and to hold the recipient's written commitment to use the funds for qualifying activities in the bank's assessment areas along with the recipient's IRS Form 990 and its operating and program budgets.

What the service test would stop looking at

Retail banking services are currently assessed on branch distribution, alternative delivery systems and the range of services offered. The proposal would limit that to credit services and the distribution and availability of retail banking facilities, which takes deposit services out of the examination.

The judgment the agencies have asked for

The procedural history is the part that is easy to miss, and it is the most consequential thing in the document.

The 2023 CRA rules were enjoined by the Northern District of Texas in March 2024, days before they took effect. The agencies appealed, then asked the Fifth Circuit to hold the appeal while they wrote a rule rescinding the enjoined one. That rescission proposal published in July 2025 and drew about 47 comments. The agencies have now decided not to finalise it.

Instead, on 1 July 2026 the OCC and the FDIC moved to dismiss their own appeal, which the Fifth Circuit granted on 9 July. They are now asking the District Court to enter a final judgment against them. Their proposed language would declare that future amendments to their CRA regulations could neither rest on a reading of "entire community" that permits assessing a bank's retail lending outside the areas where it operates and maintains deposit-taking facilities, nor on a reading of "credit needs" that permits assessing deposit products.

That is a request, not an entered order. If a court grants it, two agencies will have obtained a ruling limiting what they and their successors may write.

The Federal Reserve is not on this document

The 2023 rules were issued by three agencies. This proposal comes from two.

The Board of Governors is not a party, and the document is careful about it. A footnote states that any decisions about the Board's next steps on the rescission proposal rest exclusively with its Governors. State member banks are supervised by the Fed for CRA purposes, so if this proposal is finalised as written and the Board does nothing, two banks of identical size could sit under different CRA frameworks depending on which regulator holds the charter.