A proposal to reform regulations that implement anti-redlining laws by the Federal Reserve is aimed at providing a basis of a consistent approach for all three federal banking agencies, the point person on the central bank’s proposal said Tuesday.
In remarks before the Chicago Community Trust, Federal Reserve Board Gov. Lael Brainard – who is leading the agency’s efforts to reform regulations implementing the Community Reinvestment Act (CRA) – said that ultimately the Fed hopes that its reform proposal “provides a foundation for the three banking agencies to converge on a consistent approach that has broad support among stakeholders.”
Brainard said the goal of the Fed’s proposal is to provide greater certainty; tailor regulations based on local community needs, bank size, and business model; and minimize burden.
In October, the Fed released a proposal (with a comment period ending Feb. 16) that it said was intended to “modernize” rules implementing the CRA, which prohibits banks from redlining and requires them to invest in the communities from which they gather deposits.
In May, the Office of the Comptroller of the Currency (OCC) released its own version of CRA rule reform. The FDIC said it supported the reform rules, but did not join in issuing a rule.
The Fed, by contrast, neither joined in issuing the OCC rules nor lent strong public support to them. Since then, the Fed has worked on its own proposal and has urged the other agencies to support it once finalized.
In other remarks, Brainard said the next step in its rulemaking process – now in the middle of the four-month long comment period, which ends Feb. 16 – is to continue to gather feedback on our proposal from a wide range of stakeholders, including local communities.
She also emphasized service to low-income areas and racial equity. “Given the expertise and leadership of the Trust (the group sponsoring her remarks) on racial equity, we will be particularly interested in your comments on the second question in our proposal: ‘In considering how the CRA’s history and purpose relate to the nation’s current challenges, how can we strengthen the CRA to address ongoing systemic inequity in credit access for minority individuals and communities?’”