By Nate Raymond
(Reuters) – A federal judge in Texas on Friday blocked enforcement of new rules adopted during the Biden administration that aimed to overhaul how lenders make loans and other services to low- and moderate-income Americans.
U.S. District Judge Matthew Kacsmaryk 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 conflicted with the Community Reinvestment Act of 1977 .
The judge, appointed by former Republican President Donald Trump, issued a preliminary injunction blocking its enforcement before it could take effect Monday. The agencies and trade groups did not respond to requests for comment.
The Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency last year updated their rules to enforce the Fair Lending Act of 1977, which aims to ensure that banks lend in their local communities.
Designed to prevent “red lining” – a discriminatory practice in which banks refuse or offer only limited loans to certain areas or populations, primarily minorities – CRA regulations measure how well banks serve the areas in which they operate.
The new rules expanded the geographic areas where lenders had to extend loans and other services to low-income Americans, a change that regulators said was necessary to reflect the rise of online banking and the decline of branch banking banking.
But Kacsmaryk agreed with the business and banking groups that filed the lawsuit in February that the new rules went beyond what the 1977 law authorized.
It said the rules went too far by allowing banks to be assessed not only in geographic areas where they maintain physical branches but also in other areas where they conduct retail lending and by allowing regulators to assess the availability of a bank’s deposit products. bank, not just credit, in a community.
Kacsmaryk said the agencies have never before claimed authority to rate banks wherever they conduct retail lending. “On the contrary, since 1978 they have limited themselves to the areas surrounding the deposit collection centers,” she said.
Kacsmaryk is the only active judge in Amarillo and has helped make his court a favored venue for conservative litigants challenging federal government policies during President Joe Biden’s administration.
It attracted national attention last year when it suspended approval of the abortion pill mifepristone. The U.S. Supreme Court allowed the pill to remain on the market while it considered the case, which it heard on Tuesday.
The Judicial Conference of the United States, the judiciary’s policymaking body, earlier this month adopted a discretionary policy that aims to ensure that cases challenging laws are randomly assigned to judges and cannot be “swapped.” from litigants to comprehensive jurists in single judge courts.
(This story has been refiled to fix link to ruling in paragraph 3)