InfoBytes Blog
Federal Reserve Governor discusses Community Reinvestment Act modernization
On May 18, Federal Reserve Board Governor Lael Brainard spoke before a community development conference in New York City to discuss the Community Reinvestment Act’s (CRA) role in supporting low- and moderate-income (LMI) neighborhoods and the importance of “refreshing” CRA regulations to accommodate for, among other things, technology-driven changes that have made banking accessible via online and mobile platforms. Brainard covered five principles for CRA modernization, including (i) updating CRA regulations to accommodate different business models that serve the needs of LMI communities while still sustaining branches; (ii) clarifying performance measures for productive CRA investment activities and finding ways to “reduce the distortions that lead to some areas becoming credit ‘hot spots’ and others credit deserts”; (iii) tailoring CRA regulations and evaluation methods to take into account banks of different sizes and business models; (iv) improving and promoting consistency and predictability across and within agencies; and (v) ensuring that the revised CRA regulations continue to “mutually reinforce[e] laws designed to promote an inclusive financial services industry” as well as “fair access to credit.”