Small Lenders Alarmed at Their Inclusion in Anti-Redlining Rule

Federal banking regulators’ rewrite of anti-redlining rules is intended to bring heightened scrutiny to big banks, but community lenders say they will get caught in the crossfire.

The Federal Reserve, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency on Tuesday approved a sweeping overhaul of the rules governing the Community Reinvestment Act, a 1977 law enacted to address discriminatory lending practices by banks and federal housing agencies. Among the raft of changes in the 1,494-page document is a recalibration of which banks are subject to the toughest requirements.

Banks with at least $2 billion ...