Beneficial State Bank opposes effort to block Community Reinvestment Act regulations by filing amicus brief

The brief requests the court to vacate a preliminary injunction that is currently preventing long-awaited updates to the Community Reinvestment Act from going into effect, making it harder to hold banks accountable to the communities they serve.

OAKLAND, Calif., August 7, 2024 — Beneficial State Bank has filed an amicus brief with the U.S. Court of Appeals for the Fifth Circuit urging it to allow important new financial regulations under the Community Reinvestment Act (CRA) to go into effect. Beneficial State Bank strongly opposes ongoing efforts by the American Bankers Association, Independent Community Bankers of America, and others to block or weaken these regulations, which would help modernize the financial sector and improve the services banks provide to the communities in which they operate.

"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, the CEO of 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.”

In the amicus brief, Beneficial State Bank argues that allowing the updated regulations to go into effect would benefit both banks and the public. Between 2009 and 2020, the CRA spurred banks to make more than $2.5 trillion in home loans to low-and moderate-income borrowers and lend more than $856 million to small businesses in communities across the U.S. But since the legislation was first passed in 1977, the financial sector has evolved significantly, especially with the surge in online banking.

Most in the industry agree that the CRA must be reformed for this modern era. Yet even after a highly consultative process to develop the final rule, powerful groups are still blocking it from being enforced. This uncertainty makes it harder for banks to develop and implement programs to meet their regulatory requirements and better serve their customers.

“This isn’t the first time that the banking lobby has decided to file a lawsuit and spend millions of dollars rather than update its practices to be fairer and more transparent. In many cases, the very same banks that have practiced racial and ethnic discrimination are arguing that this improved legislation is inconvenient, which is simply abhorrent,” said Leach. “We believe the banking sector should see CRA reform not as a burden but as an opportunity — one that can improve financial inclusion while also helping banks modernize their practices. This would be a win-win for both customers and financial institutions and a much-needed step in the direction of a fairer financial system.”

While Beneficial State Bank strongly supports allowing the final CRA rule to go into effect, it argues that the legislation does not go far enough to achieve its real purpose of ensuring financial institutions meet the credit needs of the communities they operate in; let alone remedy the economic injustices perpetuated by the industry. The bank calls for additional reform to fulfill the CRA’s initial goal of reversing the years of racism in the banking industry that precipitated its passage.

Read the full amicus brief.