A proposed overhaul of Community Reinvestment Act regulations does not adequately account for the costs and benefits of certain provisions in the draft rule, Federal Reserve Gov. Michelle Bowman opined during a speech to the Kansas Bankers Association on Saturday. While saying she was supporter of the fundamentals behind CRA, Bowman expressed concern that banking agencies are moving ahead with changes without attempting to either ensure or analyze whether the benefits exceed the costs, which she called a fundamental element of effective regulation. ABA also raised concerns about the CRA proposal in a comment letter submitted Friday.
Bowman also raised concerns about a proposed review of the regulatory framework for analyzing bank mergers, announced earlier this year by the Justice Department and FDIC. Bowman said she would be worried about any changes that make mergers more difficult for small and regional banks, and urged banks to submit feedback on the proposal. She also said changes must address longstanding issues with the existing merger framework, such as its failure to account for new technologies and competition from credit unions and other nonbank actors.
Finally, Bowman acknowledged that while returning to on-site bank examination is continuing, progress has been somewhat slow. “That said, the Fed intends to return to some form of on-site supervision. We find substantial value in those in-person interactions during bank examinations.”