The 2023 final rule sought to update the Community Reinvestment Act (CRA) enforcement, emphasizing support for community development and lending to low-income borrowers. It proposed including mobile and online banking in assessments and narrowing the retail lending test. However, a lawsuit led to a federal judge blocking its implementation. The updated rule was criticized for exceeding statutory authority and increasing regulatory burdens, particularly for community banks. A proposal to revert to the 1995 CRA regulations is anticipated to clarify expectations for banks, with public comments due 30 days post-publication.
The 2023 final rule aimed to modernize enforcement of the 1977 anti-redlining law, requiring U.S. banks to support community development and lend to low-income borrowers.
A lawsuit filed by industry groups challenged the updated rule, leading to a preliminary injunction that blocked its implementation just before key provisions were set to take effect.
Most requirements under the revised CRA were scheduled to apply starting Jan. 1, 2026, but the 2023 rule likely exceeded statutory authority and added greater regulatory burden.
Today's proposal to return to the CRA framework that existed before the 2023 final rule will provide banks with certainty and clarity regarding CRA expectations.
#community-reinvestment-act #banking-regulations #legal-challenges #lending-practices #consumer-protection
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