Banks sue their regulators over new fair lending rules

The big picture: Typically banking trade groups have tried to avoid litigation against their key regulators — in this case, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve are defendants.

• But over the past year and a half, more than 30 companies and trade groups representing banks, funds and other firms have filed at least 15 suits against financial regulators over rules, policies and other issues, according to reporting from Reuters.

Zoom in: Filed this week in the Northern District of Texas, the case covers updates to the Community Reinvestment Act, a 1977 law that encourages banks to lend to low- and moderate-income borrowers in their communities.

• The latest update aims to bring the policy into the internet era when people use online banks that don't necessarily have a physical presence where they live. (Go deeper.)
• The plaintiffs include the American Bankers Association, the U.S. Chamber of Commerce, the Independent Community Bankers of America and their Texas affiliates.
• They argue the changes are unlawful, go beyond the regulators' authority, are convoluted, and could discourage lending.

What they're saying: The banking groups say they support the goals of the CRA. "Given federal regulators' failure to respond to public comments and fix significant flaws in this rulemaking, we were left with no choice but to reluctantly file this lawsuit," the president of the American Banking Association said in a statement.

• The other side: "This is a short-sighted move by a relatively small but well-resourced group of banks," said Jesse Van Tol, the president of the National Community Reinvestment Coalition, in a statement.
• In a statement last year, Lael Brainard, the director of the National Economic Council, said the updated CRA would encourage affordable housing investments around the country and promote better access to credit for underserved communities.