On the eve of a sister regulator moving forward in publicly proposing revisions to rules implementing anti-redlining laws at banks, the chair of the Federal Reserve made it clear that his agency is not ready to sign on to that proposal.
Further, he was also clear that if the Fed cannot agree with the Federal Deposit Insurance Corp. (FDIC) on the proposal – which the latter will consider at its meeting Thursday – or the Office of the Comptroller of the Currency (OCC) on a similar, pending proposal, the Fed will face that reality – without a “path forward.”
In a press conference Wednesday following a meeting of the Fed’s rate-setting Federal Open Market Committee (FOMC) – which was dominated by the Fed decision to leave interest rates as is – Federal Reserve Board Chair Jerome H. (“Jay”) Powell said the central bank’s board is “strongly committed” to the mission of the Community Reinvestment Act (CRA). The Fed sets rules for its member banks and bank holding companies for implementing the law.
“We know the CRA is a very important law and we are strongly committed to the mission of ensuring that banks provide credit throughout their communities, particularly addressing the needs of low- and moderate-income households and neighborhoods,” Powell said.
On Thursday, the FDIC Board is scheduled to consider a proposal that would revise rules for CRA that the FDIC implements for non-member Fed banks and state, federally insured banks. It is expected that the FDIC rule will closely track a proposal (not yet released) by the Office of Comptroller of the Currency (OCC) for rules for national banks.
But the Fed, so far, has chosen not to get on board with the FDIC and OCC proposals.
Powell said the Fed “thinks it is time for modernization” of the rules. “We’ve thought that for some time,” Powell added.
He said the Fed “worked very hard to try to get aligned with the OCC” on its proposal (which serves as a model for the FDIC proposal). “And, my hope is that we can still do that,” Powell said.
However, the Fed leader expressed no real optimism that can be accomplished, sounding almost skeptical.
“I don’t know whether that will be possible or not; we’ll just have to see,” Powell said. “If we can’t, I’m not sure what the path forward would be.”
Powell said the Fed would not want to create either confusion or tension between the various regulatory regimes that may (or may not) be adopted by the other federal banking agencies and may be “slightly different.”
“I hope that’s something we don’t have to face, but we will if we have to,” Powell said.