Vol. 108 2024 Issue 4 (July/August)

Courts Pump the Brakes on CRA Overhaul


While the banking industry has been battered about by the “regulatory tsunami” in recent months, bankers can now breathe a small sigh of relief.

In a win for the industry, a Texas federal judge in late March issued a preliminary injunction in ABA’s lawsuit challenging the Community Reinvestment Act final rule. This injunction means that banks can put their compliance efforts on pause until the court decides the merits of the case. It is also the latest signal from the courts that they agree with our view that in a number of these recent regulatory actions, the agencies have gone too far.

That has been our argument in several legal challenges that are currently pending in federal court. ABA has filed four lawsuits over the past two years on behalf of our members, challenging a UDAAP examination manual update by the Consumer Financial Protection Bureau, the CFPB’s section 1071 final rule, the CFPB’s late fee rule and, of course, the CRA final rule.

As I mentioned in my remarks at the ABA Washington Summit earlier this year, suing federal regulators is never our first or preferred course of action, and we remain committed to engaging constructively with the agencies wherever we can.

But we’ve seen a disturbing pattern recently of regulators moving ahead with rulemakings that fall outside their regulatory authority and ignoring constructive feedback from banks and other stakeholders. When that happens, litigation is the only tool left in the toolbox. It’s one we’ve wielded reluctantly, but one we’ll never shy away from using when it’s warranted.

ABA and our members fully support the goals and principles underlying the CRA, and we agree that the 30-year-old regulations should be updated to reflect the realities of modern-day banking. However, the “updates” made in the final rule exceed the lines drawn by Congress in the CRA statute by authorizing the evaluation of some banks outside their physical deposit-taking footprint and on their deposit products, in addition to whether the bank meets the credit needs of the communities it serves.

And as we reviewed this final rule, we concluded that it fails to consider banks’ demonstrated commitment to all communities, and instead creates a framework that risks undermining the very spirit of the original law by creating disincentives for banks to offer certain products or lend outside their branch networks. We were heartened to see the court agree that our arguments to that effect have merit.

We share this CRA win with our counterparts at the Texas Bankers Association, the Independent Community Bankers of America, the Independent Bankers of Texas, the Amarillo Chamber of Commerce, the U.S. Chamber of Commerce and the Longview Chamber of Commerce. As the case moves forward, we will continue to speak with one unified voice to amplify the concerns we all share about what these rules would mean for bank customers and local communities.

Serving communities is at the core of what banks do. We need to ensure that the regulations governing America’s banks are supporting that important work, not hindering it.

Rob Nichols has been president and CEO of the American Bankers Association since 2015 after 10 years at the helm of the Financial Services Forum, a nonpartisan economic policy and advocacy organization. He also served in the George W. Bush administration as assistant secretary for public affairs at the Treasury Department.

Email Rob at

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