Banking Groups Sue Agencies on Final CRA Rules

February 12, 2024

The Independent Community Bankers of America, the American Bankers Association, and other banking trade groups sued the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), and the Office of the Comptroller of the Currency (OCC) on Feb. 5 over revisions to the regulations implementing the 1977 Community Reinvestment Act (CRA).

The CRA requires banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods. (Please see here for CREFC’s most recent CRA comment letter.)

  • Late last year, the banking agencies finalized the most significant changes since 1995 to regulations implementing the CRA.
  • The new rule requires banks to lend to LMI neighborhoods in areas where they have a concentration of mortgages and small-business loans, rather than just where they have physical branches.

The suit claims that the banking agencies have:

  • “Abandoned the statute’s geographic, deposit-taking touchstone in favor of additional sweeping assessment areas”; and
  • Violated both the CRA and Administrative Procedure Act.

What it means: While debatable whether or not the banking groups will prevail, this lawsuit is an example of the increasingly aggressive steps the industry is willing to take to combat proposed and final rulemakings.

As reported in previous CREFC Policy and Capital Markets Briefings:

  • The banking trades are preparing litigation should the final bank capital rule prove unnecessarily stringent;
  • Several market participants are considering litigation upon the release of the Securities and Exchange Commission’s climate disclosure requirements; and
  • The U.S. Chamber of Commerce and the American Farm Bureau sued the state of California over its recently passed climate disclosure laws.

What they’re saying: Some market participants note that suing the regulators over anti-redlining regulations might come across as tone deaf given the banking sector’s arguments that a bank capital proposal could harm low-income borrowers.

However, as a TD Cowen analyst pointed out to American Banker:

The banks are smart if they are using litigation to delay implementation beyond the election. It preserves the ability to restart the process if a Republican wins the White House.

CREFC continues to closely monitor the ever-shifting regulatory landscape.

Please contact Sairah Burki ( with any questions.


Sairah Burki
Managing Director, Regulatory Affairs
suing regulators
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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