OFN Opposes Lawsuit Against Community Reinvestment Act Reforms
OFN has issued a statement opposing the lawsuit against the new Community Reinvestment Act rules.
Read time: 3 minutes
On February 5, 2024, several banking trade groups filed a lawsuit in the Northern District of Texas against the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) related to the recent update to the Community Reinvestment Act (CRA) rules. The lawsuit alleges that regulators exceeded their authority in reforming the CRA, particularly in the creation of Retail Lending Assessment Areas (RLAAs), a new structure created to increase bank obligations to invest in communities where their lending activity is substantial, regardless of bank physical presence.
“Opportunity Finance Network (OFN) is profoundly disappointed by recent legal action filed by a coalition of financial industry trade groups against necessary and overdue reforms to the Community Reinvestment Act,” said OFN President and CEO Harold B. Pettigrew, Jr. “This lawsuit overlooks what the CRA reforms intend to achieve: a more inclusive and equitable financial system. The creation of Retail Lending Assessment Areas helps drive bank reinvestment in the communities in which they operate, regardless of their physical presence. Eliminating this provision would further exacerbate the investment gap between high- and low-income communities.”
As landmark civil rights legislation, the CRA has played a pivotal role in dismantling the terrible legacy of redlining by requiring banks to serve the needs of low- and moderate-income communities. The reforms, introduced in October 2023, come more than four decades after the law was first passed and are a necessary evolution of the legislation to adapt to the current banking landscape and ensure that the original intent of the law remains intact. Further, the lawsuit claims the reforms introduce “unnecessary complexity and compliance burdens,” which does not represent the comprehensive, consultative process that shaped these reforms in response to the urgent need to address persistent economic disparities.
The CRA updates are a necessary step forward in ensuring that banks continue to fulfill their obligations to all communities, particularly communities of color and other communities that have been impacted by a history of discrimination and disinvestment. OFN is committed to advocating for policies that promote fair lending practices and advance economic justice through community investment. We stand in support of the CRA rule reforms and are disappointed by the lawsuit that has been brought by the banking industry.
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