OCC Proposes Simplified CRA Strategic Plan to Ease Compliance Burden on Community Banks

Key Takeaways

• Simplified CRA Pathway: The OCC has proposed a streamlined CRA strategic plan process designed to reduce regulatory burden for community banks while preserving CRA objectives.
• Tailored Examinations: The strategic plan option allows banks to customize their CRA examinations based on local credit needs, business models, and institutional capacity.
• Reduced Administrative Complexity: The proposal clarifies required measurable goals and simplifies how strategic plans are drafted and submitted for OCC approval.
• Broad Applicability: The OCC says the approach could benefit all community banks, from small retail lenders to larger, digitally focused institutions.
• Part of a Larger Reform Effort: The guidance builds on reforms announced in October and November aimed at proportionate supervision and reduced burden for community banks.

Deep Dive

The Office of the Comptroller of the Currency on Wednesday released proposed guidance aimed at reducing regulatory burden for community banks by simplifying how they can comply with the Community Reinvestment Act.

The proposal introduces a streamlined strategic plan process that would allow community banks to tailor their CRA examinations more closely to the needs of their local markets, while reducing the complexity and administrative effort involved in drafting and submitting CRA strategic plans for regulatory approval.

The move follows a series of community bank–focused reforms announced by the OCC in October and November, part of a broader effort to recalibrate supervision and examination practices to better reflect the size, scope, and business models of smaller institutions.

“Community banks are important drivers of economic growth and require a tailored, proportional supervisory framework that reflects their critical role in local economies,” Comptroller of the Currency Jonathan V. Gould said in a statement.

He added that because community banks are inherently focused on meeting local financial needs, a simplified CRA strategic plan would allow them to redirect resources toward supporting local credit and investment activity. Gould said the OCC will continue prioritizing reforms intended to reduce burden while strengthening the role of community banks as economic engines.

Under the CRA’s strategic plan option, banks can design a customized framework for meeting CRA obligations based on local credit needs and the institution’s capacity, constraints, product offerings, and overall business strategy. The OCC’s proposed guidance seeks to make that option more accessible by clarifying what measurable goals and plan components are required under CRA regulations and by simplifying the process for drafting and submitting a strategic plan for agency approval.

The OCC emphasized that the flexibility of the strategic plan option could make it a useful compliance tool for a broad range of community banks, from small, retail-focused institutions to larger, non-traditional community banks that deliver products and services primarily through digital channels.

The proposed guidance reflects the OCC’s continued effort to tailor regulatory expectations without changing the underlying statutory purpose of the CRA, which is to encourage banks to help meet the credit needs of the communities they serve.

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