On October 13, TAAHP filed formal comments with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) on their proposed changes to the Community Reinvestment Act (CRA) regulations. TAAHP also signed onto the national CRA sign-on letter joined by Housing Credit organizations across the country.
The proposal, published August 12, would raise the CRA large bank threshold from $1.649 billion to $10 billion in assets. Banks between those two figures would be reclassified as intermediate banks and would no longer face the separate investment test, which is one of the main reasons banks buy Housing Credits. Banks provide roughly 75 to 80 percent of Housing Credit equity, and at least 71 percent of it is driven by CRA, according to the Affordable Housing Tax Credit Coalition (AHTCC).
Texas would feel these changes across the state. According to the National Association of Affordable Housing Lenders’ CRA map, Texas would lose 84 of its 246 banks with CRA community development incentives. The number of Texans living in community development deserts, where no bank with those incentives serves the community, would rise from 74,000 to 124,000, and another 535,000 Texans would newly live in areas served by five or fewer such banks. If all three bank regulators adopted these thresholds, 751,926 Texans would newly fall into thin coverage or a community development desert, more than in any other state.
Seven Texas counties would lose every bank with community development incentives under the primary proposal, which sets the small bank threshold at $1 billion and the large bank threshold at $10 billion.
• Frio County, South Texas, about 18,000 residents
• Duval County, South Texas, about 10,000 residents
• Jim Hogg County, South Texas, about 5,000 residents
• Haskell County, West Texas, about 5,000 residents
• Mills County, Central Texas, about 4,000 residents
• Donley County, Panhandle, about 3,000 residents
• Knox County, West Texas, about 3,000 residents
Rural Texas is already the most exposed. Today, 87 percent of rural census tracts in Texas are served by five or fewer banks with community development incentives, or by none. Under the proposal, the share of rural tracts with no such bank would rise from 8 to 13 percent, and the share of micropolitan tracts with five or fewer or none would rise from 36 to 58 percent. Wharton, Palo Pinto, Kleberg, and Jim Wells counties would each fall from six or more of these banks to five or fewer. In Kleberg County, the share of deposits held at these banks would drop from 94 percent to 29 percent. The letter also cites AHTCC’s finding that about one-third of Housing Credit equity from banks under $10 billion supports rural markets, and it notes that Texas has the largest rural population of any state.
TAAHP’s letter supports the concerns raised by the ACTION Campaign and adds a Texas example. International Bank of Commerce in Brownsville invested more than $37.5 million in a Housing Credit fund, including more than $15.8 million that supported two developments in Hidalgo County (2024 CRA evaluation). With $4.0 billion in assets, it would lose the investment test under the proposal. A bank that loses the investment test would not necessarily stop investing in Housing Credits, but it would lose the CRA exam’s incentive to make those investments.
TAAHP asked the agencies to keep the large bank threshold at its current level. If the agencies raise it, TAAHP urged them to adopt the $3.252 billion alternative, which AHTCC estimates would affect 40 investor banks instead of 108. In Texas, that alternative would reduce the number of banks losing community development incentives from 84 to 65, according to NAAHL, though Jim Hogg and Duval counties would lose every such bank under either threshold. TAAHP opposed the $30 billion alternative, which would affect at least 142 investor banks and $4.5 billion in Housing Credit equity.
The agencies will review public comments before issuing a final rule. The Federal Reserve did not join the proposal, and the banks it supervises remain under the current rules. TAAHP will keep members informed as the rule moves forward. Members can look up their own county on NAAHL’s CRA map.