Agencies meeting next week on CRA reform, climate risk

The Federal Reserve Board and FDIC board of directors scheduled meetings for next week on two high-profile regulatory issues: the Community Reinvestment Act and climate risk.

Details: Scheduled for Tuesday, Oct. 24, the Fed and FDIC board meetings will include discussion of a final rule to reform CRA regulations. The FDIC also will consider an interagency climate risk management framework for large banks.

CRA Reform Background: Regulators in May 2022 issued a CRA modernization proposal designed to adapt CRA regulations to banking industry changes, improve clarity to regulated institutions, tailor evaluations and data collection to bank size and type, and maintain a unified interagency approach.

CRA Advocacy: ICBA last year called on federal banking regulators to issue a uniform CRA final rule that minimizes new data collection and reporting burdens for community banks. In previous congressional testimony, ICBA urged Congress to hold a hearing on applying CRA to tax-exempt credit unions.

Climate Risk Background: The interagency principles on managing exposures to climate-related financial risks would likely apply to banking organizations with more than $100 billion in total assets. The FDIC, Fed, and OCC have issued substantially similar proposals.

Climate Risk Advocacy: ICBA strongly opposes climate risk regulation of community banks and has expressed concerns with FDIC, Fed, OCC, Securities and Exchange Commission, and New York State Department of Financial Services proposals, including in an American Banker op-ed earlier this year. ICBA recently told Congress that climate risk regulation is an emerging threat to the business model of community banks and the customers they serve.