Federal Court Pauses CRA Rule Implementation Following ABA Lawsuit

MEMORANDUM OPINION AND ORDER

Before the Court is Plaintiffs’ Motion for a Preliminary Injunction (“Motion”) (ECF No. 19), filed February 9, 2024. Defendants filed their response (“Response”) (ECF No. 66), on March 8, 2024. Having reviewed the briefing and relevant law, the Court GRANTS Plaintiffs’ Motion. Defendants are hereby ENJOINED from enforcing the regulations published at 89 Fed. Reg. 6574 (Feb. 1, 2024) (to be codified at 12 C.F.R. Sections 25, 228, and 345) against Plaintiffs pending the resolution of this lawsuit. The effective date of April 1, 2024, along with all other implementation dates, are hereby EXTENDED, day for day, for each day this injunction remains in place. 

BACKGROUND

The Community Reinvestment Act of 1977 (“CRA”) was enacted to address “redlining” — the practice of refusing credit in neighborhoods “deemed too risky.” ECF No. 4 at 3. Historically, these neighborhoods were “predominantly minority and inner city.” ECF No. 20 at 9; R. MARSICO, DEMOCRATIZING CAPITAL: THE HISTORY, LAW AND REFORM OF THE COMMUNITY REINVESTMENT ACT 11 (2005). The CRA requires federal banking agencies (“FBAs”) to assess an institution’s record “of meeting the credit needs of its entire community, including low- and moderate-income” neighborhoods. 12 U.S.C. § 2903(a)(1). And it requires separate evaluations for each metropolitan area where an institution maintains one or more branch offices. Id. § 2906(b)(1)(B). Those evaluations, in turn, result in one of four ratings: “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial noncompliance.” Id. § 2906(b)(2)(A)–(D).

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