House Democrats want 120 days to review a 400-plus-page rewrite of bank anti-redlining rules

Comptroller Jonathan Gould and the committee's Democrats are arguing about the same money, or rather about whether examiners should keep giving banks credit for spending it outside the loan book. Gould said the proposal would prevent the CRA from becoming "a social credit score for banks" or "a funding mechanism for activist NGO networks" ^[8]. "Taken together, the proposed revisions likely will significantly impact which institutions are encouraged to meet the credit needs of their communities through activities that extend beyond lending such as community development activities," the Democrats wrote ^[6].

Congress passed the statute in 1977 to address de facto lending discrimination against communities of color. It grades banks on lending to low- and moderate-income customers and neighborhoods, usually in areas drawn around their branches and deposit-taking ATMs ^[10]. The proposal keeps that lending test but narrows the lending and service activities it counts ^[4].

Democrats asked for at least 120 days ^[1] on a text of more than 400 pages ^[3], roughly 3.3 pages a day at their own minimum ^[1]. The lawmakers cited concern that the rewrite was adopted behind closed doors ^[13]. The letter also questioned its potential interaction with the 21st Century ROAD to Housing Act ^[14]. The comment window is the short part of this fight. The first Trump administration's rewrite, backed by then-Comptroller Joseph Otting, lacked consensus with the FDIC and the Fed, and the revisions the OCC pursued alone were rescinded by the Biden administration ^[11]. Biden's regulators finalized their own overhaul in 2023 ^[12]. The reported account does not say whether the Fed has joined the FDIC and OCC on this one ^[1].

If the agencies grant the 120 days, the final rule arrives later. If they keep their schedule, the groups the Democrats cite, financial institutions among them, have to finish an analysis they say needs more time inside the original window, according to the letter ^[7]. The longest path is a final rule that a later administration rescinds, as happened to the OCC's solo version ^[11]. I think banks should plan around that third path. A bank that cuts community development spending because of this proposal is betting the rule outlasts the officials who wrote it. I would drop that view if the final rule is issued with the full agency consensus the Otting-era rewrite lacked ^[11].