CRA Lawsuit Brings Fissures Between Banking Advocates to the Forefront

Financial Services attorney Leonard Bernstein was quoted in an American Banking article recapping a lawsuit opposing amendments to the Community Reinvestment Act (CRA). A coalition of banking industry groups sued several federal agencies, including the Federal Reserve and Federal Deposit Insurance Corporation (FDIC), arguing they exceeded their statutory authority in issuing a final rule implementing the changes, which apply to firms with more than $2 billion in assets and modify the way banks are graded for CRA ratings. Regulators consider CRA ratings when institutions apply to open new branches or execute a merger or acquisition. Mr. Bernstein commented on one of the opposition's arguments regarding uneven obligations between banks and non-banks.

"I think there could be a legitimate fairness issue among the banks, wondering why others in the industry don't have the same obligation," he said. "That is as much a political question as a business question, and that's been there from the start."

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