From Yahoo Finance: 2025-03-28 11:40:00

U.S. bank regulators plan to roll back a 2023 update to fair lending rules for banks following a legal challenge from the banking industry. The move reinstates prior requirements under the Community Reinvestment Act, a law mandating banks to serve local communities.

The updated rules aimed to modernize CRA requirements, including serving lower-income Americans beyond physical branches to online users. U.S. banking and business groups sued regulators over the new rules, arguing they exceeded authority and could hinder lending. A Texas judge blocked enforcement a year ago.

Community Reinvestment Act regulations aim to prevent redlining, where banks discriminate in lending. Poor CRA grades can put banks in a “penalty box,” barring them from mergers and other deals. The rollback of the 2023 update comes after a legal challenge from the banking industry.

Read more: US bank regulators to rescind updated fair lending rules following bank litigation