WASHINGTON — Two leading Democratic banking lawmakers are criticizing the American Bankers Association, Chamber of Commerce and other industry groups for their
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency last year
A cohort of banking groups — including Independent Community Bankers of America, American Bankers Association, U.S. Chamber of Commerce, Texas Bankers Association and Independent Bankers Association of Texas — filed a lawsuit in February arguing that the agencies exceeded their authority in finalizing their rules implementing the law.
The banking agencies, meanwhile, have argued with the courts that the CRA
Warren, who sits on the Senate Banking Committee, and Waters, who is ranking member of the House Financial Services Committee, made a similar argument in their letter.
"This lawsuit is meritless," the lawmakers said.
The Democratic lawmakers also said that the current rules amount to essentially a "free pass" when banks are examined for CRA compliance.
"The banking industry has changed drastically since the last major update to the CRA in 1995, and the current, outdated rules are giving banks a free pass, allowing them to meet CRA standards even while engaging in the discriminatory practices the law was designed to stop," they said. "These rules must be updated, and your efforts to stop regulators from doing so is unjustified and harmful."
The CRA was passed in 1977 in order to ensure that banks were extending credit to all of their customers, rather than only to their wealthier customers who pose a lower risk of default. The law requires banks to make loans and provide services to low- and moderate-income neighborhoods located in the census tracts in which they have branches.
With the advent of mobile banking, more and more banks take deposits
The plaintiff groups in the lawsuit argued that the agencies' efforts to have mobile deposits be included as a metric for CRA lending obligations violates the statute, which they say specifically ties a bank's CRA obligations to its branch network.
"Even if the Final Rules' attempt to regulate banks in a geographically boundless manner could be understood as consistent with the authority conveyed by the CRA — and again, they cannot — their promulgation would be a clear example of economically significant agency action taken in the absence of the requisite 'clear congressional authorization," the lawsuit said.
