Regulators to Revert Fair Lending Rules Amid Legal Challenge

U.S. bank regulators are set to repeal a 2023 update to fair lending rules, returning to previous requirements following a legal dispute from the banking sector. Agencies, including the Federal Reserve, announced their intention to revive the original rules under the Community Reinvestment Act of 1977.

U.S. bank regulators announced on Friday their intention to revoke the 2023 update to fair lending rules, opting to restore earlier requirements. This decision follows a legal challenge posed by the banking industry against the new framework.

In a collaborative statement, the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency revealed plans to propose the reinstatement of previous rules under the Community Reinvestment Act. This act, established in 1977, mandates banks to serve local community credit needs.

The move is seen as a response to industry concerns, emphasizing the regulators' commitment to ensure equitable servicing of community banking requirements while addressing legal complexities.

(With inputs from agencies.)