Federal Regulators Split Over Strategy To Scrap Biden-Era CRA Rules
By CU Today Staff —
WASHINGTON—Federal banking regulators are diverging in how they plan to unwind the Biden Administration's overhaul of the Community Reinvestment Act (CRA), with the Federal Reserve remaining in litigation while the FDIC and Office of the Comptroller of the Currency move to exit a pending Fifth Circuit appeal, according to new court filings reported by Law360.
The filings stem from regulators' broader effort to rescind the 2023 CRA modernization rule and restore the longstanding 1995 framework after a Texas federal judge blocked the rule in litigation brought by banking trade groups. In March, the three agencies jointly announced plans to repeal the rule, saying they would return to the prior framework while pursuing a new rulemaking.
According to Law360, the Fed told the Fifth Circuit it intends to remain a party to the appeal because, unlike the FDIC and OCC, it believes the litigation remains relevant while it completes the rulemaking process. The FDIC and OCC, meanwhile, asked to withdraw from the appeal, arguing the forthcoming rescission will render the dispute moot.
The CRA, enacted in 1977 to combat redlining and encourage banks to meet the credit needs of low- and moderate-income communities, plays a key role in bank merger and expansion approvals. Reuters has reported the now-blocked 2023 rule sought to modernize CRA requirements for digital banking by expanding how banks' lending obligations are evaluated beyond their physical branch networks, a change the banking industry argued exceeded regulators' statutory authority.
Originally reported by CU Today.