Texas judge blocks Biden administration from expanding lending rules

U.S. District Judge Matthew Kacsmaryk blocked the enforcement of new regulations adopted during the Biden administration that sought to overhaul the way lenders extend loans and other services to low- and moderate-income citizens.

In that regard, Reuters explained that the judge issued a preliminary injunction "blocking their enforcement before they could take effect Monday. The agencies and trade groups did not respond to requests for comment."

Last year, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency revised their regulations to enforce the Fair Lending Act of 1977, which is intended to ensure that banks lend in their local communities.

Fair lend Ruling by Juan Peña

"The new rules broadened the geographies in which lenders would be required to extend loans and other services to low-income Americans, a change regulators said was needed to reflect the rise of online banking and the decline of bank branches," detailed Reuters.

However, Judge Kacsmaryk agreed that the regulations exceeded the limits by allowing banks to be evaluated not only in areas where they have physical branches, but also in other areas where they make retail loans, and by allowing regulators to evaluate the availability of a bank's deposit products, not just credit, in a community.

Kacsmaryk agreed that the agencies never before claimed the authority to evaluate banks no matter where they made retail loans. "On the contrary, they have — since 1978 — limited themselves to areas surrounding deposit-taking facilities," Judge Kacsmaryk said.