ICBA Joins Lawsuit Against Agencies Over CRA Rules

“CBA of Georgia appreciates the efforts by ICBA and other trades regarding the suggested changes to CRA. It is important for all community bankers to be engaged in this discussion and support the effort to right-size this, as well as all, proposed regulatory changes.”

John McNair, President & CEO
Community Bankers Association of Georgia

ICBA, the Independent Bankers Association of Texas, Texas Bankers Association, Amarillo Chamber of Commerce, American Bankers Association, U.S. Chamber of Commerce, and Longview Chamber of Commerce filed a lawsuit Monday against the federal banking regulators for exceeding their statutory authority with their recent Community Reinvestment Act final rule. With a lot happening all at once, I wanted to back up and give you a breakdown of how we got here.

The Rule’s Harmful Impact: The primary purpose of the CRA is simple: financial institutions must meet the credit needs of the communities in which they do business, including those residing in low- and moderate-income neighborhoods. While the community bank business model is itself consistent with this purpose, the new rules disregard community banks’ strong track record of meeting and exceeding the credit needs of underserved communities. In fact, the unnecessarily complex evaluation could force banks to close branches or reduce product offerings, contravening the CRA’s stated purpose.  

Ongoing ICBA Advocacy: Since the CRA revisions were proposed in 2022, ICBA has spoken to hundreds of community bankers who have shared their concerns over the proposal’s unnecessary complexities and costs. We submitted a comment letter to the regulators that clearly laid out our position and concerns. Unfortunately, while the revisions to the CRA framework in the 2023final rules incorporate some of the policies ICBA staunchly advocated, many of our concerns were ignored by the agencies. The fact that a $2 billion community bank and a $2 trillion institution would both be evaluated using the new rule’s large bank test disregards the need for tiered regulation and is why we must continue this fight.

Monday’s Filing: As a result, Monday’s complaint—which we filed in the Northern District of Texas—asks the court to vacate the final rule and seeks a preliminary injunction to pause it while the court decides the merits of our case. The complaint explains how the new rules will limit future bank lending. It also identifies how the regulatory agencies exceeded their statutory authority in violation of the Administrative Procedure Act by evaluating banks beyond their deposit-taking footprint and their record of meeting the credit needs of local communities.

What’s Next: Stay tuned for additional updates from ICBA on how this case proceeds. And thank you for your input as we continue working to mitigate the harmful impact of the CRA rule on community banks nationwide.