Powell: No decision yet on Fed approach to reforming CRA rules; meetings with other agencies suspended

No decision has been made yet on a separate proposal from the Federal Reserve to reform anti-redlining rules, the chairman of the agency’s board said Tuesday.

Meanwhile, discussions between that regulator and other federal banking regulators over reforming the rules have ground to a halt.

In testimony before the House Financial Services Committee, Federal Reserve Board Chairman Jerome H. (“Jay”) Powell said his agency has not yet decided whether to move forward with its own proposal to reform rules implementing the Community Reinvestment Act (CRA). Both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have issued a joint proposal.

In addition, Powell said the Fed is no longer meeting with its fellow banking regulators over reforming the rules. Prior to the release of the FDIC and OCC proposals in December, the three federal banking agencies had been meeting weekly.

In past comments, Powell has said the Fed is committed to the intent and aims of the CRA rules, which generally require banks to invest in the communities from which they take deposits. Last month, Powell said reform of rules should be done in a way that is a “win-win” for banks (which are looking for certainty under the rules) and the communities that they serve.

“The law can be more effective and efficient,” Powell said, adding that it is also a good time to take into consideration how banking services have changed.

He also said in January that the Fed worked hard to “get on board with the OCC and the FDIC” on their rule revision proposals (which are now out for comment), “and we still hold out hope we will be able to.” Powell noted that the Fed spent much time on research and analysis for revising the rules – but that “we haven’t made any decisions yet on what we are going to do going forward.”

At Tuesday’s hearing, Powell would not endorse calls by committee Democrats to increase the comment period for the OCC/FDIC proposal from 60 days to a longer period. Powell did say, in response to questions from Chairwoman Maxine Waters (D-Calif.), that the public would have time to comment on the Fed’s proposal, should there be one.

In other comments during the hearing, Powell said the Fed still expects to have the “core” of the stress capital buffer in place for this year’s bank stress tests. In 2019, the stress test instructions were released in early March.