The federal government’s efforts to expand fair lending regulations have hit a roadblock for numerous institutions.
U.S. District Judge Matthew Kacsmaryk ruled on March 29 that the new regulations, set to go into effect on April 1, are founded on flawed interpretations of federal law.
Existing regulations, such as those outlined in the Community Reinvestment Act (CRA), mandate that banks and other lenders offer services to low- and moderate-income individuals within their local communities. The proposed expanded regulations broaden the scope of “community” to encompass any individuals with whom the lenders conduct business.
Government officials claimed that the inclusion of the word “entire” before community in the law prompted a thorough review of the statute and led to the implementation of new rules.
“True, ‘the word ‘entire’ … should not be read out of [the statute],” Judge Kacsmaryk wrote in his ruling. “But it does not have the effect defendants attribute to it. In modifying ‘community,’ the word ‘entire’ merely clarifies that the whole community must be served, it does not change what a ‘community’ is. If a statutory ‘community’ is created around every individual customer with whom a bank does business—regardless of whether that customer is within the