ICBA applauded the federal banking agencies for announcing plans to rescind their final rule reforming the Community Reinvestment Act, citing its disproportionate implementation costs for community banks.
Details: The federal banking regulators announced that, in light of pending litigation, they intend to issue a proposal to rescind the CRA final rule issued in October 2023 and reinstate the CRA framework that existed prior to that final rule.
Statement: “As ICBA, the Independent Bankers Association of Texas, and other groups have argued in a lawsuit asking the court to vacate the rule, federal regulators exceeded their statutory authority and acted arbitrarily and capriciously in advancing their amendments to CRA rules,” ICBA President and CEO Rebeca Romero Rainey said. “While ICBA and the nation’s community banks support agency efforts to modernize the CRA’s implementing regulations, the October 2023 rule disregards community banks’ strong track record of meeting and exceeding the credit needs of underserved communities.”
Litigation: ICBA and other groups in September filed an appellate brief with the U.S. Court of Appeals for the 5th Circuit as part of their legal challenge to the CRA final rule. 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: 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 would limit future bank lending.
Background: Released in October 2023, the CRA final rule was scheduled to take effect in April while requiring bank compliance by Jan. 1, 2026.
