Trump Regulators Move to Curb Bank Rule Critics Call Weaponized

The Trump administration's top banking regulators proposed a sweeping overhaul of the Community Reinvestment Act on Friday, aiming to stop a 1977 anti-redlining law from what critics describe as a pipeline for bank donations to left-wing advocacy groups.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation released a joint proposal that would shift the CRA's focus back to core lending activities. The law, enacted to stop banks from denying loans or depository services in low-income and minority neighborhoods, has drawn criticism for years over how banks satisfy its requirements.

Comptroller Jonathan Gould said the changes would ensure the CRA is "no longer used as a social credit score for banks, nor as a funding mechanism for activist NGO networks under the guise of community development." Gould wrote on X that under the Biden administration, the CRA "became an onerous tax on community banks that failed to drive investment into the very regions they were meant to serve."

The proposal targets a specific complaint: that banks have met CRA obligations by donating to advocacy groups instead of making loans. The new rule would require community development grants and donations to go to the intended communities, rather than being diverted to other activities.

Gould framed the move as part of the broader deregulatory push by President Donald Trump and Treasury Secretary Scott Bessent, saying the OCC will continue "taking steps to reduce unnecessary regulation and propel economic growth on Main Street."

Key Republican lawmakers on the financial services committees welcomed the proposal. Rep. Andy Barr, R-Ky., who chairs the House Financial Services subcommittee on financial institutions, said, "For years, left-wing activist groups have weaponized the Community Reinvestment Act to pressure financial institutions far beyond Congress's original intent."