Regulators propose new rules to curb activist influence on bank CRA scores

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp unveiled a draft rule aimed at ending the practice of banks boosting their Community Reinvestment Act scores through donations to left-leaning activist nonprofits. Comptroller Jonathan Gould said the change will force banks to prove they are directly meeting the credit needs of the neighborhoods they serve. Philanthropic contributions will only count toward CRA credit if they are linked to genuine lending activities, and banks must limit grant overhead to 15 percent.

The proposal also lifts the asset limits that classify small and intermediate banks, granting lighter supervision to many institutions. Republican lawmakers such as Bill Hagerty and Andy Barr hailed the measure as a long-overdue reform of a “shakedown” system. While the plan targets the CRA, the Federal Reserve opted out, so state-chartered banks remain subject to the current rules.