Brainard Highlights CRA Reform Proposals for Minority Banks

Speaking to the National Bankers Association, Federal Reserve Governor Lael Brainard today highlighted four new provisions specific to minority depository institutions in the Fed’s recent Community Reinvestment Act modernization proposal. Brainard said that the Fed’s advance notice of proposed rulemaking would:

  • Give banks credit for activities with MDIs and other eligible institutions outside their assessment areas at either the state or institution level, providing clarity about how these activities count.
  • Explicitly designate activities with MDIs and other eligible institutions as a pathway to achieving an “outstanding” CRA rating.
  • Provide credit for MDIs and women-owned banks for investments in other MDIs and eligible institutions, whereas today only majority-owned banks can receive CRA consideration for MDI inverstments.
  • Provide CRA credit for MDIs and women-owned banks for a limited range of internal bank investments, including staff training, recruitment or new branch openings.

“We consistently heard from MDIs and larger banks that there is a lack of awareness of the existing MDI provisions in the CRA regulations or a lack of understanding of how collaboration with MDIs ultimately ‘count’ in a CRA examination,” Brainard said, adding that the Fed plans to “highlight all MDI special provisions and make the credit they receive more prominent and clear in revised regulation, examination guidance, and other public documentation.”