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Banks Balk at Biden Team’s Anti-Redlining Plan, Teeing Up Clash

  • Regulators’ May proposal draws pushback from trade groups
  • Critics say scoring bank compliance with law has been too easy
Lael Brainard, vice chair of the US Federal Reserve
Lael Brainard, vice chair of the US Federal ReservePhotographer: Ting Shen/Bloomberg

Banks are pushing back on key parts of Washington’s latest bid to get them to boost lending to lower-income communities, setting up a policy clash with key Biden administration regulators and Democratic lawmakers.

Two of the industry’s top lobbying groups have come out against a proposal to change how firms are judged on efforts to provide credit to historically under-served groups. The stakes for tweaking the decades-old standards are high because weak scores could potentially hamstring expansion and critics say banks have been graded too easily.