Court grants ICBA-requested injunction of CRA final rule

Court Ruling: Judge Matthew Kacsmaryk of the U.S. District Court for the Northern District of Texas granted the injunction to extend the CRA final rule’s effective date—today, April 1—along with all other implementation dates. The effective dates will be extended for each day the injunction remains in place, pending the resolution of the lawsuit.

So, does this mean we will remain an Intermediate Small Bank until the lawsuit is resolved instead of reverting back to a small bank as of today's date (4/1/24)?

Following - this is my question, as well.

I had thought the thresholds did not go into place until 2026, unless I am confused (which why wouldn't I be with all of these changes, and delays.)

My understanding was that it was in place, they make reference to activity from 2022-2023.

Jwills, my understanding was the CRA final rule is effective April 1, 2024. For those large banks that have to collect and report CRA data they have until January 1, 2026 before they have to start collecting under the new rule and January 1, 2027 before they have to start reporting the data under the new rule.

However, I may be the one confused.

I assume this pause is for all institutions nationwide, regardless of asset size?

I think it affects everything (nationwide, regardless of size). I wonder how long this injunction might last.

"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."

Texas Bankers Association et al v. Office of the Comptroller of the Currency et al, Docket No. 2:24-cv-00025 (N.D. Tex. Feb 05, 2024), Court Docket

Yes, the court order has directed that the effective date and each subsequent applicability date (1/1/2026 and 1/1/2027, for example) be postponed one day for each day that the court's injunction remains in place.

The injunction will stay in place until the Texas district court rules on the underlying suit. And, assuming that the plaintiffs or defendants aren't happy with the decision, it will likely be extended pending an appeal to the Court of Appeals and possibly to SCOTUS.

So, based on these comments I believe I can safely assume we would still be considered an Intermediate Small Bank until the final rule goes into effect based the number of days outlined by the injunction.

Any opposing opinions?

Dan - my bank is in the same situation as you are. I reached out to my FRB compliance contact and your interpretation matches the response I received. Continue as you are today until a new effective date has been determined.

Thank you for the confirmation.

The injunction says that the defendants are enjoined from enforcing the New CRA against PLAINTIFFS.
Do you think they mean this be nationwide for banks and not just the actual plaintiffs in the case? Is this just a technicality?

Ballard Spahr (Law Firm with a Consumer Finance Division) indicated that the injunction only applied to plaintiffs (just the associations like ABA and ICBA, not their member banks). They opined that this would ultimately be extended nationwide, similar to the 1071 injunction as a matter of practicality.

https://www.consumerfinancemonitor....t-of-cra-final-rules-against-plaintiffs/

Whether the injunction pertains to all banks or only the petitioners may not matter because of the delay approved by the regulators in the applicability dates for all provisions in the new rule even though the effective date is April 1, 2024.

Having said the foregoing I believe it is entirely possible for the regulators to implement the calibrated benchmarks nonetheless because no one knows what the calibration points have been since 1995. So it is possible for the regulators to put the calibrated standards into effect without even announcing it! All they need to do is to instruct the examiners to apply the 80% and 60% multipliers to the benchmarks and voila, the new "raise the bar" standards under the lending test have been implemented.

My advice to bankers: anticipate that the new benchmarks may already have been put into effect and self-evaluate your lending test performance using the calibrated standards.

Len your comment is a little jarring. I'm curious if you have heard any scuttle to make you think the 80% and 60% could be applied now. I also have another question. For CD investments regarding deposits in a CDFI/MDI, the new regulation states they need to be 12 months or longer. Is that also something that could be in question now?

The injunction will stay in place until the Texas district court rules on the underlying suit. And, assuming that the plaintiffs or defendants aren't happy with the decision, it will likely be extended pending an appeal to the Court of Appeals and possibly to SCOTUS.

Has there been any updates to this? I have searched but I have not found anything addressing this that has been published since April. I just want to be sure I haven't missed something. Thanks.

Just found this right after posting the above.

https://www.consumerfinancemonitor....t-to-lift-injunction-blocking-cra-rules/

Remember that under the Biden Administration in 2021, the OCC rescinded the 2020 CRA rule that had been approved by the OCC only a year earlier. It wouldn't surprise me that things could change just as abruptly under a Trump Administration if the R's also get control of the Senate and retain control of the House. That major regulations like the CRA could be changed back and forth in a single year creates unbelievable uncertainty in the regulatory environment and makes regulatory compliance incredibly difficult.

I would like to provide an update to my CRA Committee. Any new information? Will this be on pause until after elections?