Texas federal judge blocks updated fair lending rules By Reuters

nate raymond

(Reuters) – A federal judge in Texas on Friday blocked enforcement of new rules adopted by the Biden administration to overhaul how lenders provide loans and other services to low- and moderate-income Americans.

U.S. District Judge Matthew Kacsmaryk in Amarillo, Texas, sided with banks and business groups, including the American Bankers Association and the U.S. Chamber of Commerce, in arguing that the new regulations violate the Community Reinvestment Act of 1977.

A judge appointed by former Republican President Donald Trump issued a preliminary injunction blocking their execution before it takes effect Monday. The agency and trade group did not respond to requests for comment.

The Federal Reserve, the Federal Deposit Insurance Corporation and the Comptroller of the Currency last year updated rules implementing the Fair Lending Act of 1977, which ensures banks provide loans to their communities.

Designed to prevent redlining – the discriminatory practice in which banks deny or only provide limited loans to certain regions or populations, often minorities – CRA regulations measure how well banks serve the areas in which they operate.

The new rules expand the areas where lenders must extend loans and other services to low-income Americans, a change regulators said was needed to reflect the rise of online banking and the decline of bank branches.

But Kacsmaryk agreed with the business and banking groups that filed the lawsuit in February that the new rules go beyond what was authorized by the 1977 law.

He said the regulations went too far by allowing assessments not only in the geographic areas where banks maintain physical branches, but also in other areas where they conduct retail lending, and by allowing regulators to assess the availability of bank deposit products. Credit, from the community.

Kacsmaryk said the agencies have never claimed authority to evaluate banks wherever they conduct retail lending. “Rather, they have restricted it to the area surrounding deposit-taking facilities since 1978,” he said.

Kacsmaryk is the only active-duty judge in Amarillo and has helped make his court a preferred venue for conservative litigants challenging federal policies during President Joe Biden’s administration.

He received national attention last year when he halted approval of the abortion drug mifepristone. The U.S. Supreme Court allowed the pills to hit the market while it considers the case, hearing arguments on Tuesday.

The U.S. Judicial Conference, the judiciary’s policy-making arm, announced earlier this month a policy that would randomly assign judges to cases challenging the law and prevent litigants from “judge shopping” to sympathetic legal scholars in single-judge courts. A discretionary policy was adopted.

(This story has been rewritten to correct the link to the paragraph 3 ruling.)