The nation’s top banking regulators moved Friday to end what senior Republicans called a decades-old “shakedown” scheme that allowed left-wing groups to squeeze billions of dollars from US banks.
The plan, exclusively obtained by The Post, comes from the Office of the Comptroller of the Currency, an independent agency inside the Treasury Department, and the Federal Deposit Insurance Corp.
Together, the two agencies oversee roughly $26 trillion in US banking assets.
Comptroller of the Currency Jonathan Gould told The Post that the new joint rules, set to drop Friday, will stop major banks from buying regulatory favor through donations to progressive activist nonprofits.
“Banks are going to actually have to rely upon their record (of) meeting the credit needs of the local communities in which they operate,” he said in a brief interview.
The blueprint targets the Community Reinvestment Act. The 1977 anti-redlining law was designed to ensure banks meet the credit needs of local communities, including low- and moderate-income neighborhoods.
Federal regulators currently grade banks on local lending, community investments, and branch networks. A poor score can block an institution from securing approval for profitable mergers.
Critics contend banks have long boosted their ratings by donating to advocacy groups that endorse them to regulators. They claim left-leaning nonprofits use the threat of regulatory protests to strong-arm merging banks into signing massive community benefits agreements.
Under the new proposal, banks will no longer earn regulatory credit simply by writing checks to activist organizations, according to the copy of the rules obtained by The Post.
Instead, institutions must prove they are directly lending to local families and small businesses.
Banks can still make philanthropic gifts. However, those dollars will no longer count toward federal rating requirements unless the money directly supports local credit needs, the document shows.
Senior Republicans praised the changes.
“For too long, an obscure and convoluted regulation has forced banks to cut checks to left-wing organizations,” said Sen. Bill Hagerty (R-Tenn.). “This government-mandated shakedown needs real reform.”
Rep. Andy Barr (R-Ky.) agreed.
“Left-wing activist groups have weaponized the Community Reinvestment Act to pressure financial institutions far beyond Congress’s original intent,” he said. “Instead of expanding access to credit, the CRA has too often become a tool to limit access to capital.”
One senior Trump administration official singled out the Washington-based National Community Reinvestment Coalition, calling it the “biggest shakedown artist-in-chief.”
In April 2024, the coalition reached a $25 million agreement with KeyBank after pushing regulators to downgrade the bank’s score over minority lending practices.
The coalition’s financial filings show it sits on a nearly $90 million building one block from the White House. It bought the 11-story property in 2016 and leases out plush office space. Filings also show CEO Jesse Van Tol makes at least $400,000 a year.
The Post has sought comment from the NCRC.
Other megabank mergers have drawn similar activist protests demanding multibillion-dollar financial commitments.
When BMO Financial sought to acquire Bank of the West for $16.3 billion, the California Reinvestment Coalition and the NCRC formally protested to regulators. To secure approval, BMO ultimately agreed to a sweeping $40 billion community benefits plan.
A similar dynamic played out during US Bank’s 2021 acquisition of MUFG Union Bank. Facing intense opposition and threats of regulatory blockades, US Bank signed a massive $100 billion, five-year agreement to satisfy activist coalitions and clear the merger.
When banks do make community development grants under the proposed new rules, strict controls will apply. Grants will qualify for credit only if directly used for community development projects.
To prevent funds from being consumed by administrative costs, large banks must document that grant recipients spend no more than 15% on overhead expenses.
The rules also narrow retail evaluations to focus strictly on credit services, excluding deposit accounts. Regulators said evaluating credit services better reflects how local credit needs are met.
The proposal also delivers significant regulatory relief to community banks. It raises the asset threshold defining a “small bank” to $1 billion, up from $412 million. The threshold for “intermediate banks” will rise to $10 billion from $1.65 billion.
Banks newly classified as intermediate institutions will be exempt from heavy data collection and reporting rules. They will receive more flexible supervision and be evaluated only on major product lines.
Regulators will also publish an official list of community development activities that qualify for legal credit. The rule clarifies four core development areas: affordable housing, civic aid for lower-income residents, economic development, and neighborhood stabilization.
Senior administration officials, speaking on condition of anonymity, predicted opponents, especially Democrat-controlled states, would file “spurious” court challenges to block the changes.
The Fed did not sign on to the plan. That means state-chartered banks in the Federal Reserve System will keep playing by the old rules.
A Fed spokesman declined to comment.