Federal Judge Blocks Biden Administration’s Regulations on Lending Practices
Judge Halts Implementation of New Regulations
A federal judge in Texas, appointed by former President Donald Trump, has blocked the enforcement of new regulations introduced by the Biden administration. These regulations aimed to change how lenders offer loans and services to low- and moderate-income individuals.
Support from Banking and Business Groups
U.S. District Judge Matthew Kacsmaryk in Amarillo, Texas, sided with banking and business organizations, including the American Bankers Association and U.S. Chamber of Commerce, in determining that the new rules violated the Community Reinvestment Act of 1977.
Ruling on Community Reinvestment Act
The judge issued a preliminary injunction against the regulations, preventing them from taking effect on Monday. The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency had updated their rules to enforce the fair lending law enacted in 1977.
Concerns Over Regulation Overreach
The new rules expanded the areas where lenders were required to provide services to low-income individuals, a move regulators believed was necessary due to the shift towards online banking. However, Judge Kacsmaryk agreed with the business and banking groups that the regulations exceeded the authority granted by the 1977 law.
Impact on Lending Practices
He noted that the rules allowed banks to be assessed not only in areas where they had physical branches but also in regions where they conducted retail lending. This departure from previous practices raised concerns about the scope of regulatory oversight.
Judge’s Background and Legal Actions
Judge Kacsmaryk gained national attention for suspending the approval of the abortion pill mifepristone and has been involved in several high-profile legal cases. His recent ruling aligns with a new policy adopted by the U.S. Judicial Conference to prevent judge shopping in single-judge courts.
