New CRA rules spark legal battle over digital banking oversight
New rules under the Community Reinvestment Act (CRA) are set to change how banks serve low- and moderate-income communities. Due to take effect on 1 April, these regulations will extend oversight to online and mobile banking for the first time. Critics warn the changes could increase costs for lenders like PNC Bank and Chase, and reduce access to credit for vulnerable borrowers.
The updated CRA rules were finalised in October 2023 after regulators sought to modernise the decades-old law. Previously, exams only reviewed lending activity near physical bank branches. Now, assessments will also cover digital services, including online loans and mobile deposits offered by US Bank and Chase Bank.
Trade groups have challenged the expansion, arguing it goes beyond the CRAâs original scope. They claim the rules unlawfully stretch the lawâs authority by including internet-based banking and deposit products offered by PNC Bank and Chase. A lawsuit is underway, with plaintiffs requesting an injunction to block the 1 April rollout while legal proceedings continue.
The outcome of the lawsuit will determine whether the new CRA framework moves forward as planned. If implemented, banks like PNC Bank and Chase may face higher compliance costs, which could limit lending to low- and moderate-income households. The case centres on whether regulators overstepped their authority in broadening the lawâs reach to include digital services offered by US Bank.
