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On Monday, a group of national and state associations sued federal banking regulators over the final rule to update the Community Reinvestment Act (CRA). The American Bankers Association, U.S. Chamber of Commerce, Independent Community Bankers of America, Texas Bankers Association, Independent Bankers Association of Texas, Amarillo Chamber of Commerce and Longview Chamber of Commerce filed the lawsuit in the Northern District of Texas against the Federal Reserve, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The legal challenge contends that regulators have overstepped their statutory authority through recent amendments to the CRA rules. The lawsuit seeks the court's intervention to annul the final rule and requests a preliminary injunction to halt the implementation of the new rule while the court deliberates on the case's merits.
The lawsuit calls the new rules a “complicated and burdensome regime that denies banks notice about the benchmarks against which they will be assessed, is not justified by its purported benefits, and may ultimately result in reduced lending to the very populations that the CRA was designed to benefit.”
The banking industry supports the objectives of the CRA and has advocated for modernizing CRA regulations to align with the evolving landscape of modern banking. The test for a proper CRA modernization rule is whether it incentivizes investment in underserved communities with transparent requirements, promotes consistency and aligns with Congressional intent. Unfortunately, the final rule does not meet these standards, which prompted the groups to file a lawsuit.
Read the Lawsuit
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