ABA, Associations Sue Federal Regulators Over CRA Implementation Rules

Posted: Feb 07 2024

ABA, the U.S. Chamber of Commerce, ICBA and four Texas state associations have sued the Federal Reserve, FDIC and OCC for exceeding their statutory authority with their recent amendments to final rules implementing the Community Reinvestment Act. In a lawsuit filed in the Northern District of Texas, the groups asked the court to vacate the rules. They also will seek a preliminary injunction pausing the new rules while the court decides the merits of the case.

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The Federal Reserve and FDIC boards late last year approved the rules, although neither vote was unanimous. In their lawsuit, the associations allege the rules exceed congressional authority and violate the Administrative Procedure Act by evaluating bank lending well beyond banks’ deposit-taking footprint, as required by the CRA. They also said it violates the law by evaluating some institutions’ records of providing deposit products and services to low-to-moderate income consumers even though the CRA only authorizes regulators to assess a bank’s record of meeting the credit needs of its local communities.

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“We strongly support and appreciate the goals of the Community Reinvestment Act, but in this exceedingly complex rulemaking, the agencies have created a CRA evaluation framework that unlawfully exceeds what Congress authorized and fails to recognize banks’ demonstrated commitment to fully serving their communities,” ABA President and CEO Rob Nichols said. He noted that in 2022, banks provided more than $227 billion in capital to low-to-moderate income communities in the form of mortgages and small business loans and an additional $151 billion in community development loans.

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“Even more troubling, the final rules risk undermining the very goals of CRA by creating disincentives for banks to offer certain products or lend in geographies outside of their branch network,” Nichols added. “Given federal regulators’ failure to respond to public comments and fix significant flaws in this rulemaking, we were left with no choice but to reluctantly file this lawsuit.”
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To read the lawsuit, visit: https://www.aba.com/advocacy/policy-analysis/trade-associations-sue-regulators-cra