Oakland, Calif.-based community development bank Beneficial State Bank is calling for the implementation of Community Reinvestment Act modernization over the objections of industry trade associations.
The community development financial institution filed an amicus brief with the U.S. Court of Appeals for the Fifth Circuit on Aug. 7 requesting the New Orleans-based court vacate a preliminary injunction preventing the CRA updates from going into effect.
Beneficial State Bank’s support for CRA modernization comes as banking trade groups push back against the updates. In February, the Independent Community Bankers of America, American Bankers Association, U.S. Chamber of Commerce and several Texas-based trade groups filed a lawsuit in the U.S. District Court for the Northern District of Texas alleging regulators exceeded their statutory authority in modernizing the rule. Though the groups said they generally support modernizing CRA rules, they also said“the unnecessarily complex evaluation could force banks to close branches or reduce product offerings.”
In late March, the U.S. District Court for the Northern District of Texas issued a preliminary injunction against the CRA updates, pushing back implementation until January 2026 and extending the effective date by one day for each day the injunction continued.
Beneficial State Bank pushed back against broader industry opposition, alleging instead that the updates don’t go far enough to ensure equity and meet the credit needs of local communities.
“The banking associations behind this lawsuit claim to represent the entire banking industry, but they don’t speak for all of us,” said Randell Leach, CEO of $1.7 billion Beneficial State Bank. “The preferences for higher industry profits and the echo chamber from a handful of megabanks should not dictate the regulatory landscape nor define what’s in the public interest. Many banks, including Beneficial State Bank, oppose this lawsuit and know that CRA modernization is necessary to tackle economic inequities. We urge the court to lift the injunction and allow necessary reform to move forward.”
The lawsuit and injunction are also opposed by the Opportunity Finance Network, a national network of more than 400 CDFIs.
Finalized last year, the updates require community banks with more than $2 billion in assets to comply with the same CRA evaluation standards as the largest banks, including by undergoing a retail lending test, facing expanded assessment areas and undertaking more rigorous data and reporting obligations. To account for the increase in mobile banking, the standards also require banks to lend to lower-income communities in areas where they have a concentration of small business and mortgage loans, not just physical branches.