Texas federal judge blocks updated fair lending rules



A federal judge in Texas issued a preliminary injunction on Friday, halting the enforcement of new regulations introduced during the Biden administration aimed at revamping how lenders offer loans and services to low- and moderate-income individuals.

U.S. District Judge Matthew Kacsmaryk in Amarillo, Texas, ruled in favor of banking and business groups, including the American Bankers Association and U.S. Chamber of Commerce, stating that the new regulations violated the Community Reinvestment Act of 1977.

The judge, appointed by former President Donald Trump, blocked the implementation of the rules before they were set to take effect on Monday. Neither the agencies nor the trade groups involved commented immediately.

Last year, the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency updated their rules enforcing the fair lending law of 1977, designed to ensure banks provide services to their local communities.

The updated rules aimed to broaden the areas in which lenders must provide loans and services to low-income Americans, reflecting the growth of online banking and decline in bank branches. However, Kacsmaryk agreed with the groups that the new regulations exceeded the authority granted by the 1977 law.

He noted that the rules allowed banks to be evaluated not only in areas where they have physical branches but also in other regions where they conduct retail lending. Additionally, regulators could assess a bank's deposit products, not just credit, in a community, which Kacsmaryk deemed as going too far beyond the law's scope.

Kacsmaryk pointed out that since 1978, the agencies had limited themselves to evaluating areas surrounding deposit-taking facilities, and never claimed authority to assess banks wherever they conducted retail lending.

Kacsmaryk, the sole active judge in Amarillo, has become known for being a preferred choice for conservative litigants challenging federal government policies during President Joe Biden's administration. He drew attention last year for halting the approval of the abortion pill mifepristone, a case currently under consideration by the U.S. Supreme Court.

The U.S. Judicial Conference recently adopted a discretionary policy to ensure cases challenging laws are randomly assigned judges, preventing litigants from selecting sympathetic jurists in single-judge courts.

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