A federal judge in Texas has issued a ruling blocking the enforcement of updated regulations introduced during the Biden administration, which aimed to reform how lenders provide loans and services to low- and moderate-income individuals.
U.S. District Judge Matthew Kacsmaryk in Amarillo, Texas, supported banking and business organizations such as the American Bankers Association and U.S. Chamber of Commerce in determining that the new rules violated the Community Reinvestment Act of 1977.
Judge Kacsmaryk, appointed by former President Donald Trump, granted a preliminary injunction halting their enforcement before they could become effective on Monday. Neither the agencies nor the trade groups offered comments on the ruling.
Last year, the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency updated their regulations enforcing the fair lending law of 1977, aimed at ensuring banks lend within their local communities.
Originally designed to combat discriminatory practices like redlining, where banks restrict lending to specific areas or populations, particularly minorities, CRA regulations evaluate how well banks serve the areas in which they operate.
The updated rules expanded the geographical areas in which lenders must provide loans and services to low-income individuals, a change regulators argued was necessary to adapt to the growth of online banking and the decline of physical bank branches.
However, Judge Kacsmaryk agreed with the business and banking groups that sued in February, asserting that the new regulations exceeded the scope authorized by the 1977 law.
He criticized the rules for allowing banks to be assessed not only in areas where they have physical branches but also in regions where they conduct retail lending, and for permitting regulators to evaluate the availability of a bank’s deposit products, not just credit, within a community.
Judge Kacsmaryk noted that the agencies had never previously claimed the authority to assess banks wherever they conducted retail lending, emphasizing that they had, since 1978, confined their assessments to areas surrounding deposit-taking facilities.
Kacsmaryk, the sole active judge in Amarillo, has made his courthouse a preferred venue for conservative litigants contesting federal government policies during President Biden’s tenure.
He garnered national attention last year when he suspended the approval of the abortion pill mifepristone. The U.S. Supreme Court allowed the pill to remain available while it deliberates on the case, which it recently heard arguments for.
The U.S. Judicial Conference, the judiciary’s policymaking body, recently adopted a discretionary policy aimed at ensuring that cases challenging laws are randomly assigned to judges and cannot be manipulated by litigants to seek sympathetic jurists in single-judge courts.
