The nation’s leading banking regulators announced a new policy on Friday aimed at eliminating what some senior Republican lawmakers describe as a long-standing practice allowing progressive activist groups to extract substantial sums from U.S. banks. The guidelines were developed jointly by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), which collectively supervise approximately $26 trillion in U.S. banking assets.
The revised framework focuses on reforming the enforcement of the Community Reinvestment Act (CRA), a federal law enacted in 1977 to encourage banks to meet the credit needs of the communities they serve, particularly in low- and moderate-income neighborhoods. Under the current evaluation system, banks receive regulatory ratings based on lending activity, community investments, and the presence of branch networks. These ratings can influence approval for merger transactions and other business decisions.
Critics argue that under the existing framework, some financial institutions have been able to enhance their CRA ratings through donations to left-leaning nonprofit organizations. These advocacy groups, the critics say, leverage the threat of regulatory opposition to secure large-scale community-benefits agreements from merging banks.
The new proposal removes regulatory credit for banks that support activist organizations through donations alone. Instead, institutions must demonstrate direct lending to local families and small businesses to improve their CRA ratings. While banks will still be allowed to make philanthropic contributions, such gifts will no longer influence federal regulatory assessments unless the funds explicitly address local credit needs.
Comptroller of the Currency Jonathan Gould emphasized that banks will now need to rely more on their tangible financial support within communities rather than indirect contributions to advocacy groups. “Banks are going to actually have to rely upon their record meeting the credit needs of the local communities in which they operate,” he said.
The initiative received praise from Republican lawmakers, with Senator Bill Hagerty of Tennessee describing the prior system as a “government-mandated shakedown” that compelled banks to fund left-wing organizations. Proponents argue that the reforms will restore the CRA’s original intent by focusing regulatory standards on actual lending outcomes rather than politically motivated contributions.
The proposed changes mark a significant shift in how regulators assess community investment efforts by banks. They seek to promote transparency and direct economic support to underserved areas while curbing the influence of activist groups on regulatory evaluations. The OCC and FDIC are expected to finalize the rules following a period of public comment and additional internal review.