Rather than reversing new fair-lending rules, Congress should instead completely repeal the Community Reinvestment Act

Today, House Democrats plan to use the Congressional Review Act to overturn recent actions taken by the Office of the Comptroller of the Currency (OCC) to modernize fair-lending rules under the Community Reinvestment Act. The comptroller proposed the reforms in December 2019 and finalized them this May. The reforms are the most significant update to low-income lending rules for U.S. banks in a quarter-century.

CEI Policy Analyst Matthew Adams explained that fair-lending rules have done more harm than good:

“While imperfect, the reforms implemented by the comptroller were a step towards modernizing outdated rules under the Community Reinvestment Act. It’s disappointing to see House Democrats attempt to get rid of these reforms, especially at a time when we need to ensure a safe and steady flow of credit.

“The Community Reinvestment Act led to decreased access to credit, increased risk, and increased costs for small lenders, as a 2008 CEI study showed. If legislators want to increase lending in low- and middle-income communities, Congress should do away with the law entirely or at least make compliance voluntary.”