Fed’s Brainard Discusses Potential Changes to CRA Assessment Area Definition

As financial regulators continue their review of the Community Reinvestment Act regulations, Federal Reserve Governor Lael Brainard today said that they are considering making adjustments to the assessment area definition that would allow banks to receive CRA consideration for community developments in a more expansive area.

“We have been considering a possible approach that might rework the assessment area definition so that banks of a certain scale would have separate assessment areas for their retail activities and their community development activities,” Brainard said. “This would retain the law’s focus on the credit needs of a bank’s local community by evaluating the retail lending and services it offers in the county or other geographic area surrounding its branches, deposit-taking ATMs, and other concentrations of lending and deposit-taking.”

Brainard added that this approach “would help eliminate uncertainty and could encourage more capital for affordable housing, community facilities, and economic development activities in underserved areas.”