ICBA and other groups filed an appellate brief with the U.S. Court of Appeals for the 5th Circuit as part of their legal challenge to federal banking regulators’ Community Reinvestment Act final rule.

Background: A federal judge earlier this year granted an injunction against the CRA rule, as requested by ICBA and the other groups in a legal challenge. The effective dates will be extended for each day the injunction remains in place, pending the resolution of the lawsuit.

Details: In the recent brief, the groups said:

  • The rules unlawfully evaluate banks’ performance nationwide, not within the bank’s “community.”

  • The CRA only allows evaluation of banks’ performance as to community credit needs.

  • The final rules inflict quintessential irreparable harm through significant, unrecoverable compliance costs.

  • The balance of the equities favors a preliminary injunction.

More on the Suit: In their original complaint, the groups said regulators exceeded their statutory authority with the CRA final rule, in violation of the Administrative Procedure Act, and that the rule will limit future bank lending.

Impact of New Rules: In a national news release after filing the suit, ICBA President and CEO Rebeca Romero Rainey said the unnecessarily complex evaluation could force banks to close branches or reduce product offerings. She said in a separate message to community bankers that the final rule ignores many community bank concerns, which is why ICBA must continue the fight.

Background: Released in October 2023, the CRA final rule was scheduled to take effect in April while requiring bank compliance by Jan. 1, 2026. In a news release responding to the final rule in October, ICBA said the rule does not sufficiently differentiate between community banks and the nation’s largest institutions.

Outlook: Information and resources on the lawsuit are available on ICBA’s CRA webpage. ICBA will provide updates on the case as it proceeds.