Powell: CRA redesign, while necessary, should encourage banks to ‘seek opportunities’

Any redesign of rules implementing anti-redlining laws – which are necessary given changes in the financial service industry since the laws were enacted in 1977 – should encourage banks to seek opportunities in underserved and rural communities, the chairman of the Federal Reserve said Thursday.

In remarks to the Housing Assistance Council’s 2018 Rural Housing Conference in Washington, D.C., Thursday, Federal Reserve Board Chairman Jerome H. (“Jay”) Powell said the Community Reinvestment Act (CRA) has been an important tool for strengthening local community and economic development infrastructure since it was enacted 41 years ago.

“We also recognize that significant changes in the financial services industry since then have hindered the law’s effectiveness, especially in rural communities, and that an update of the implementing regulations is appropriate,” Powell said. 

The central bank’s board chairman noted that the Fed’s series of community roundtables around the country “will also allow us to hear suggestions for improving CRA from local stakeholders, including many people from rural communities.”

“These perspectives will inform our deliberations on this critical regulation, and we will make a summary of our discussions available to the public,” he said.

The Fed’s ongoing series of roundtable discussions in communities across the country will also allow us to hear suggestions for improving CRA from local stakeholders, including many people from rural communities. These perspectives will inform our deliberations on this critical regulation, and we will make a summary of our discussions available to the public.

Powell noted that while the economy is strong overall, the Fed recognizes that some communities have yet to feel the full benefits of the ongoing expansion. “We are conducting research, collaborating with communities, and assessing financial regulations so that our nation’s current prosperity will benefit small towns and cities alike,” he said.

Welcoming remarks by Chairman Powell 

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