Brainard: Fed Fully Engaged in CRA Reform Process

The Federal Reserve is fully participating in an interagency process to revise Community Reinvestment Act regulations, Fed Governor Lael Brainard said today. Speaking in Denver at the first of several Fed roundtables to solicit stakeholder feedback on CRA, Brainard encouraged all parties to respond to the OCC’s advance notice of proposed rulemaking on CRA. “Even though the Federal Reserve did not join in the publication of the ANPR, we will be reading the comment letters in anticipation of working with the comptroller and Federal Deposit Insurance Corporation on a joint proposal,” she said. “We understand the importance of having the agencies work toward one set of CRA regulations that are clear and consistently applied and will do everything we can to make that possible.”

Brainard also outlined several principles that she said will guide the Fed’s participation in CRA reform, many of which align with points raised in ABA’s white paper on the topic. She emphasized the need to revisit the CRA assessment area concept. She also said that “CRA regulations should be tailored to banks of different sizes and business models” and added that the agencies “should consider whether assessment areas also should be tailored to the business models employed by banks.”

She also called for CRA reform to encourage banks to “see out opportunities in underserved areas,” including by providing “more incentives” for banks and avoiding distortions that create “credit hot spots.” Finally, she said the Fed is seeking to “promot[e]greater consistency and predictability in CRA evaluations and ratings,” a longstanding priority for ABA. For more information, or to join ABA’s CRA working group, contact Krista Shonk.