Nate Raymond
(Reuters) – A federal judge in Texas on Friday blocked enforcement of new rules adopted under the Biden administration aimed at overhauling how lenders provide loans and other services to low- and moderate-income Americans.
U.S. District Judge Matthew Kaczmarik in Amarillo, Texas, sided with banking and business groups, including the American Bankers Association and the U.S. Chamber of Commerce, in finding that the new rules run afoul of the 1977 Community Reinvestment Act.
A judge appointed by former Republican President Donald Trump issued a preliminary injunction blocking their enforcement before they take effect Monday. The agencies and trade groups did not respond to requests for comment.
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency last year updated their rules to enforce the 1977 Fair Lending Act, which aims to ensure banks lend to their local communities.
Designed to prevent redlining—a discriminatory practice in which banks deny or offer only limited lending to certain regions or populations, especially minorities—CRA rules determine how well banks serve the areas in which they operate.
The new rules expanded the geographic scope in which lenders were required to provide loans and other services to low-income Americans. Regulators said the change was necessary to reflect the growth of online banking and the decline of bank branches.
But Kaczmarik agreed with the business and banking groups that filed the lawsuit in February that the new rules go beyond what the 1977 law allowed.
He said the rules went too far by allowing banks to be assessed not only in the geographic regions in which they have physical branches, but also in other areas in which they conduct retail lending, and by allowing regulators to assess the availability of bank deposit products. not just credit, in the community.
Kaczmarik said the agencies had never previously claimed authority to evaluate banks wherever they did retail lending. “Instead, since 1978 they have been limited to areas around depository institutions,” he said.
Kaczmarik is the only sitting judge in Amarillo, helping make the courthouse a favored venue for conservative parties challenging federal government policies during President Joe Biden’s administration.
He drew national attention last year when he suspended approval of the abortion pill mifepristone. The U.S. Supreme Court has allowed the pill to remain on the market while the case is heard, arguments in which were heard on Tuesday.
The U.S. Judicial Conference, the judiciary’s policy-making body, earlier this month adopted a discretionary policy designed to ensure that cases challenging laws are assigned randomly by judges and cannot be “judged” by plaintiffs to sympathetic lawyers in single-judge courts.
(This story has been refiled to correct the ruling reference in paragraph 3)