Banking and Finance Law Daily Wrap Up, COMMUNITY DEVELOPMENT—N.D. Tex.: Fed close to completion of new CRA rulemaking after FDIC, OCC withdrawal, (Aug 27, 2026)

By Justin Marcus Smith, J.D.

The Fed said it is close to completing its own new final rule, widely expected to reinstate the prior CRA framework.

The Federal Reserve Board (Fed) formally responded that it does not oppose recent motions by the Federal Deposit Insurance Corporation (FDIC) and Office of Comptroller of the Currency (OCC) for judgment in favor of the Texas banking association plaintiffs in the pending Northern District of Texas litigation that challenged the October 2023 Community Reinvestment Act (CRA) Final Rule. The FDIC and OCC said the 2023 final rule exceeded their authority and moved the district court for vacatur. The Fed said the FDIC and OCC motion for entry of judgment leaves the Fed unaffected. The Fed continued that the CRA did not require joint rulemaking. The Fed will proceed on its own course and is close to completing a new final rule that is expected to reinstate prior CRA framework. The Fed did not elaborate on its intentions in recent court filings except to say that re-adoption of the prior CRA framework would moot the district court litigation and that it “will make an appropriate filing with this Court and with the Fifth Circuit as soon as it completes its rulemaking” (Texas Bankers Association v. Office of the Comptroller of the Currency, No. 2:24-cv-00025-Z-BR (N.D. Tex. Aug. 21, 2026)).

In October 2023, the Fed, FDIC, and OCC promulgated a final rule they said would “strengthen and modernize” regulations implementing the Community Reinvestment Act (OCC Bulletin 2023-32).

In February 2024, the American Bankers Association, U.S. Chamber of Commerce, Independent Community Bankers of America, and four Texas-based associations jointly (Texas Bankers’ action) sued the federal regulators by seeking Administrative Procedure Act (APA) review of the new final rule (see Banking and Finance Law Daily, Feb. 6, 2024). They also sought preliminary injunctive relief.

In April 2024, a federal district court for the Northern District of Texas preliminarily enjoined the three federal regulators from enforcing the 2023 final rule (see Banking and Finance Law Daily, Apr. 1, 2024). The three regulators filed a joint appeal.

However, after the change in presidential administration, on July 1, 2026, FDIC and OCC moved to dismiss their participation in the joint appeal. The joint appeal, pending before the U.S. Court of Appeals for the Fifth Circuit since 2024, challenged the district court preliminary injunction (see Banking and Finance Law Daily, Jul. 7, 2026). The Fifth Circuit recently dismissed FDIC and OCC participation in the appeal on the motion of those two agencies.

Although the FDIC and OCC have said they intend to pursue a different path, the Fed confirmed in recent months it will continue to work on a new rulemaking that proposes to rescind the 2023 Final Rule and reinstate the prior CRA regulatory framework (see Banking and Finance Law Daily, Jul. 16, 2025).

OCC, FDIC motions. On July 31, 2026, the OCC and FDIC filed a motion with the district court to partially lift its stay pending the federal agencies’ interlocutory appeal for the limited purpose of ruling on a contemporaneous OCC and FDIC motion conceding judgment against them. The motion sought to partially lift the stay only as to the OCC and FDIC as their dismissal from the Fifth Circuit appeal pertained only to them. The OCC and FDIC said the Texas Bankers’ plaintiffs did not oppose the motion; however, the Federal Reserve told OCC and FDIC it would submit a response.

In a contemporaneous motion for judgment, also filed on July 31, FDIC and OCC moved for the court to enter judgment against them. Specifically, they asked the court to (1) vacate the portions of the 2023 Rule and 2016 Guidance pertaining to FDIC and OCC as exceeding their statutory authority; (2) declare that FDIC and OCC regulations under the CRA may not provide for or permit assessment of a regulate institution’s retail lending activities outside the geographic areas where the institution operates physical facilities and accepts deposits; and (3) declare that FDIC and OCC regulations may not, under the CRA, provide for or permit assessment of a regulated institution’s deposit products. The regulators said this would provide “appropriate relief” to the Texas Bankers plaintiffs on their claims against FDIC and OCC. The FDIA and OCC said they consented to entry of final judgment against them on these terms. They also waived all rights to appeal that judgment. Again, the Texas Bankers did not oppose, and the Federal Reserve did not join in the motion, but it has now submitted a response.

Fed response. The Fed response did not oppose the FDIC and OCC motions. The Fed merely provided a procedural overview and stated it would be unaffected by the OCC and FDIC motions to lift the stay and enter judgment against them. The Fed acknowledged the motions sought only relief as to OCC and FDIC.

The Fed continued that while the CRA requires federal banking agencies to issue regulations to carry out the purposes of the CRA, “it does not require that they be issued jointly.” See 12 U.S.C. § 2905. The Fed said it would complete the rulemaking process and is “very close to completion,” which will affect only the Fed’s CRA regulation. Moreover, the Fed noted the district court litigation will be moot in the event the Fed rescinds the October 2023 Final Rule and reinstates the prior framework. The Fed concluded it would make an appropriate filing with the court and with the Fifth Circuit as soon as it completes its rulemaking.

The case is No. 2:24-cv-00025-Z-BR.

Judge: Kacsmaryk, M. , District Judge.

Attorneys: Sarah M. Harris (Williams & Connolly, L.L.P.) for Texas Bankers Association, Amarillo Chamber of Commerce, American Bankers Association, Chamber of Commerce for the United States of America, Chamber of Commerce for the United States of America, Independent Community Bankers of America and Independent Bankers Association of Texas.

Companies: Texas Bankers Association; Amarillo Chamber of Commerce; American Bankers Association; Chamber of Commerce for the United States of America; Chamber of Commerce for the United States of America; Independent Community Bankers of America; Independent Bankers Association of Texas; Office of the Comptroller of the Currency

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