US Regulators Propose Overhauls to Bank Credit and Lending Rules

Federal regulators introduced two separate proposals on July 31, 2026, aimed at updating banking governance and lending requirements. The Federal Reserve Board requested public comment on a proposal to modernize Regulation O, which governs credit extended to bank insiders such as executives and major shareholders. Governor Michelle Bowman stated the update seeks to modernize dollar-based thresholds that have not been comprehensively revised since 1979, intending to help community banks recruit local business leaders by providing clearer governance standards.

Simultaneously, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation announced a joint overhaul of the Community Reinvestment Act (CRA). The proposal would raise the asset threshold for small banks from $412 million to $1 billion, leaving only about 3% of institutions subject to full CRA compliance. The revisions shift examination focus toward lending performance over branch counts and narrow the criteria for community development grants to prevent funds from being used for "activist causes."

Jesse Van Tol, CEO of the National Community Reinvestment Coalition, criticized the changes, arguing they would discourage banks from making grants in rural areas and deviate from the law's original purpose of serving low-to-middle income people. Both sets of proposals have entered a 60-day public comment period.