04/01/2024 | Press release | Distributed by Public on 04/01/2024 10:57
April 1, 2024, Covington Alert
On March 29, 2024, the District Court for the Northern District of Texas granted the motion by several industry associations for a preliminary injunction of the revised Community Reinvestment Act ("CRA") regulationsthat the federal banking agencies finalized in October 2023 (the "Final Rule") and Covington summarized here. The court in Texas Bankers Association, et al. v. Office of the Comptroller, et al.enjoined the federal banking agencies from enforcing the Final Rule in its entirety against the plaintiffs, extending the effective date of April 1, 2024, as well as all other implementation dates, day-for-day for each day that the injunction remains in place. In the meantime, the existing CRA regulations will remain in effect for the plaintiffs. The plaintiffs in the case are the Texas Bankers Association, the Amarillo Chamber of Commerce, the American Bankers Association, the Chamber of Commerce of the United States of America, the Longview Chamber of Commerce, the Independent Community Bankers of America, and the Independent Bankers Association of Texas.
The plaintiffs have argued that the Final Rule exceeds the agencies' statutory authority in that it provides for the evaluation of some banks (1) outside the geographies where they operate physical facilities that take deposits; and (2) on their deposit products in addition to how they meet the credit needs of the community. In issuing its preliminary injunction, the court determined that the plaintiffs had demonstrated substantial likelihood of success on the merits based on the following reasoning:
Additionally, in issuing the preliminary injunction, the court determined that the plaintiffs had demonstrated a substantial threat of irreparable injury, citing to banks' projected costs to comply with the Final Rule, and that the balance of equities and public interest support injunctive relief.
Covington's Financial Services Group has deep experience advising banks of all sizes with CRA compliance. For further information on the Final Rule, please contact the lawyers listed.