COVID-19 serves as example, in CRA reform, for taking into account needs of individual communities, Fed governor says

The coronavirus crisis is a reminder that taking into account the unique needs and opportunities in different communities is critical as work proceeds on modernizing rules implementing anti-redlining laws, a member of the Federal Reserve Board said Tuesday.

In opening remarks delivered during a webinar on responses to the crisis, Fed Gov. Lael Brainard noted that the Community Reinvestment Act (CRA) is a powerful tool for finding solutions that serve the needs of low- and moderate-income communities.

“As we collectively pursue efforts to address the challenges of this crisis, our work on CRA modernization also reminds us how critical it is to take into account the unique needs and opportunities in different communities,” Brainard said in relatively brief opening comments for the “Investment Connection – Response to COVID-19: Colorado” webinar series hosted Tuesday by the Federal Reserve Bank of Kansas City, Kansas City, Mo.

“The COVID-19 pandemic has created an economic and public health crisis, which has caused tremendous hardship, in particular for our most vulnerable communities,” Brainard said. “The devastation is demanding that government, nonprofits, and other organizations think broadly and creatively to address the growing needs of households and businesses across the nation.”

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC) have jointly proposed changes to rules implementing CRA. The Federal Reserve did not join the two other federal banking agencies in proposing the changes. Generally, the agencies’ proposal would create more descriptive and expansive criteria for the types of activities that qualify for CRA credit. It would also require both the FDIC and the OCC to publish periodically a list of non-exhaustive, illustrative examples of qualifying activities; and establish a process for stakeholders to seek agency determination if an activity is a qualifying activity. Finally, it would establish new performance standards to evaluate banks that are not small banks.

Welcome Remarks: FRB Gov. Lael Brainard