WASHINGTON—The Federal Reserve, FDIC, and Office of the Comptroller of the Currency announced plans to rescind the 2023 Community Reinvestment Act final rule due to ongoing litigation. Instead, they will revert to the previous CRA framework, ABA Banking Journal reported.
Initially proposed in 2022 as part of a long-anticipated overhaul, the rule was finalized the following year, though it did not receive unanimous support from the Fed and FDIC boards. The American Bankers Association, U.S. Chamber of Commerce, and five national and state associations later sued the banking agencies, claiming regulators had overstepped their authority. A federal judge issued a preliminary injunction against enforcing the rule last year, ABA Banking Journal said.
In a brief statement, the three banking agencies said they will “continue to work together to promote a consistent regulatory approach on their implementation of the CRA.” They did not provide a timeline for when the Fed and FDIC boards plan to vote on rescinding the rule, ABA Banking Journal said.
ABA and the other plaintiffs welcomed the announcement: “As we have shown in our ongoing legal challenge, the 2023 effort to modernize the rules around CRA exceeded the agencies’ statutory authority and would have created disincentives for banks to invest in their communities,” they said in a joint statement. “Given the strength of our case and the court’s rulings to date, rescinding the rule is the right decision.
“The co-plaintiffs look forward to learning more about the agencies’ plan to rescind the rule,” they added. “In the meantime, the nation’s banks remain committed to complying with the Community Reinvestment Act and achieving our shared goal of supporting local communities and expanding economic opportunities for all Americans.”