Texas judge blocks CRA rule update

A federal judge has issued an injunction against a final rule by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation to update the regulations implementing the Community Reinvestment Act, arguing that the rule may exceed the statutory authority delegated to the regulators.

Bloomberg News

WASHINGTON — A federal judge in Texas has issued an injunction against banking regulators’ new Community Reinvestment Act rules, blocking enforcement until legal questions about the updated rules are resolved.

The Texas judge’s move represents a victory for bank trade groups, who Prosecution against the prudential regulator – Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and Federal Reserve – after those regulators completed reforms to the CRA in October. The lawsuit claims the regulator exceeded its statutory authority by doing so.

“While we strongly support the goals of the CRA, the final rule exceeds the regulatory authority of banking agencies and prevents banks from lending to low- and moderate-income communities that need credit most,” said the American Bankers Association, American Bankers Association. U.S. Chamber of Commerce, The Independent Community Bankers Association of America, the Texas Bankers Association, the Independent Bankers Association of Texas, the Amarillo Chamber of Commerce and the Longview Chamber of Commerce said in a statement after the judge issued the injunction. “We look forward to litigating this matter until the final outcome is determined.”

The lawsuit is Increased substantially Lobbying groups representing the banking industry have become more litigious during the Biden administration, drawing criticism from community groups that have advocated for reforms to the CRA for years.

“Courts should reject this clear attempt to use the legal system to disrupt the rulemaking process and allow banks to maintain higher CRA ratings while failing to meet the needs of community banking,” said Mike Calhoun, president of the Center for Responsible Lending. Regulating an industry with a poor track record of lending to underserved and minority groups is outrageous, but not surprising. CRA lending guidelines have not been updated in more than a quarter of a century, and a fairer, future-proof one is needed financial system.”

The judge in this case is U.S. District Judge Matthew Kacsmaryk of Amarillo, Texas. He is the only active judge in Amarillo and a judge appointed by former President Donald Trump. His courts have become favored trial venues for challengers of regulations passed by the Biden administration.

He agreed with trade groups that the updated CRA guidance for bank regulators goes beyond what was allowed under the original 1977 law. Kacsmaryk wrote that regulators may have overstepped their authority by creating the ability to evaluate banks not just where they have physical branches. Banks issue retail loans.

Another Texas judge agreed last week Move lawsuit to Washington, D.C..A lawsuit was filed in Texas to get a judge sympathetic to the industry, a blow to trade groups that the judge accused of “forum shopping.” The Fifth Circuit stayed the transfer pending a hearing on Tuesday to decide whether the transfer amounted to a denial of the defendants’ motion for an injunction against the late fee rule.

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