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FEDERAL DEPOSIT INSURANCE CORPORATION

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ADVISORY COMMITTEE ON ECONOMIC INCLUSION

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MEETING

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TUESDAY,

JUNE 28, 2022

The Advisory Committee convened at 1:00 p.m. 

EDT via Video Teleconference, Martin J. Gruenberg, 

Acting FDIC Chairman, presiding.

PRESENT:

STEVEN ANTONAKES, Executive Vice President for 

Enterprise Risk Management, Eastern Bank

MICHAEL CALHOUN, President, Center for 

Responsible Lending (CRL)

NAOMI CAMPER, Chief Policy Officer, American 

Bankers Association (ABA)

THOMAS FOLEY, Executive Director, National 

Disability Institute

KENNETH KELLY, Chairman & CEO, First Independence 

Corp and First Independence Bank

MARGARET LIBBY, Founder & CEO, MyPath

BRANDEE MCHALE, Head of Community Investing and 

Development, Citi; President, Citi Foundation

JONATHAN MINTZ, President & CEO, Cities for 

Financial Empowerment Fund

JENNIFER TESCHER, President & CEO, Financial 

Health Network

CHRISTINA TETREAULT, Deputy Commissioner, Office 

of Financial Technology Innovation, California 

Department of Financial Protection and 

Innovation (DFPI)
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ALSO PRESENT:

MARTIN J. GRUENBERG, Acting Chairman, Federal Deposit 

Insurance Corporation

MICHAEL J. HSU, Acting Comptroller of the Currency, 

Office of the Comptroller of the Currency

ROHIT CHOPRA, Director, Consumer Financial 

Protection Bureau

ZIXTA MARTINEZ, Deputy Director, CFPB

ELIZABETH ORTIZ, Deputy Director, Division of 

Depositor and Consumer Protection, FDIC

LUKE BROWN, Associate Director, Division of 

Depositor and Consumer Protection, FDIC

JONATHAN MILLER, Deputy Director, Division of 

Depositor and Consumer Protection, FDIC

MAUREEN YAP, Senior Counsel, National Fair 

Housing Alliance

KENON CHEN, Executive Vice President, Corporate 

Strategy, Clear Capital

MELODY TAYLOR, Regional Director Mid Atlantic 

Office of Fair Housing and Equal Opportunity, 

HUD

PATIENCE SINGLETON, Senior Policy Analyst, FDIC

PAMELA FREEMAN, Chief, Fair Lending and CRA 

Examinations, FDIC

RICHARD SCHWARTZ, Counsel, FDIC
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CONTENTS

Opening Remarks....................................4

Members Roundtable................................17

Home Mortgage Appraisal Bias and Efforts

to Engender Change................................79

Moderator: Luke Brown, Associate Director, Division

of Depositor and Consumer Protection, FDIC

Panelists:

Maureen Yap, Senior Counsel,................83

National Fair Housing Alliance

Kenon Chen, Executive Vice President,.......95

Corporate Strategy, Clear Capital

Melody Taylor, Regional Director Mid.......107

Atlantic Office of Fair Housing and

Equal Opportunity, HUD

Community Reinvestment Act.......................136

Moderator: Jonathan Miller, Deputy Director, 

Division of Depositor and Consumer Protection, FDIC

Panelists:

Patience Singleton, Senior.................146

Policy Analyst, FDIC

Pamela Freeman, Chief, Fair Lending........153

and CRA Examinations, FDIC

Richard Schwartz, Counsel, FDIC............172

Concluding Remarks...............................179
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P-R-O-C-E-E-D-I-N-G-S

1:05 p.m.

MS. ORTIZ: Good afternoon and good 

morning to some, and welcome to everyone to the June 

meeting of the FDIC's Advisory Committee on Economic 

Inclusion, better known as the ComE-In.

My name is Elizabeth Ortiz and I am the 

Deputy Director for Consumer and Community Affairs at 

the FDIC. 

This is our first meeting of the Advisory 

Committee in 2022 and our fourth virtual meeting, and 

hopefully our last one as we are transitioning back 

to the office and to in-person gatherings. 

Since this is a virtual meeting, we have 

a compact but full agenda. I have a brief statement 

to share before turning the meeting over to our Acting 

Chairman.

Under the Government in the Sunshine Act, 

whenever a quorum of the FDIC's Board of Directors 

deliberates on Agency business such as regulation or 

a matter of policy, the Board's meeting generally is 
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required to be open to the public and is subject to 

certain notice requirements. 

This meeting is not a Board Meeting 

called for such purposes. 

Accordingly, general discussions which 

may occur among Board Members at this meeting on 

subjects relevant to the FDIC's responsibilities, but 

which do not pose specific issues for official Board 

resolution either now or reasonably anticipated in 

the future, do not constitute a meeting that is 

required to be open to the public and subject to the 

notification requirements in accordance with the 

Sunshine Act. 

Similarly, informal or exploratory 

discussions among Board Members do not constitute a 

meeting that is required to be open to the public and 

subject to the notification requirements provided 

that any such discussions are preliminary in nature, 

that there are no relevant proposals for action 

pending before the FDIC, and that the merits of any 

proposed Agency action would be open to full 
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consideration by the Board at a later time. 

If during the course of this meeting 

Staff identify matters that should be discussed by 

Board Members at a subsequent Board Meeting in order 

to comply with the Sunshine Act, Staff will advise 

the Board Members that those matters should be 

deferred and presented to the Board in a meeting at 

a later date, at which time Board Members can engage 

in full deliberation on the proposals. 

And now it is my pleasure and my honor to 

introduce the Acting Chairman of the FDIC, Martin 

Gruenberg. 

ACTING CHAIRMAN GRUENBERG: Thank you, 

Liz, it's wonderful to see you all sort of. I kind 

of hope this is the last time we do one of these 

meetings virtually and the next time we can actually 

be in person. 

I do think the quality of the engagement 

and interaction is really night and day between an 

in-person meeting and a virtual meeting like this 

one. 
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Nonetheless, we'll make the best of it 

and take advantage of the opportunity to engage with 

you all. 

Let me start today's meeting of our 

Advisory Committee on Economic Inclusion by 

introducing the five new Members, who are joining the 

Committee. I'd like to acknowledge them.

Steven Antonakes, the Executive Vice 

President for Enterprise Risk Management at Eastern 

Bank in Massachusetts. 

Mike Calhoun, the President of the Center 

for Responsible Lending. 

Thomas Foley, the Executive Director of 

the National Disability Institute. 

Brandee Mchale, the Head of Community 

Investing and Development at Citibank and President 

of the Citi Foundation. 

And Kenneth Kelly, the Chairman and CEO 

of First Independence Corporation and First 

Independence Bank. 

All of these are extraordinary 
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individuals and they join the other Members of our 

Committee that I'd also like to acknowledge there are 

seven additional Members, five of whom are able to be 

with us today. 

Naomi Camper, the Chief Policy Officer 

for the American Bankers Association.

Margaret Libby, the founder and CEO of 

MyPath in San Francisco. 

Lisa Mensah, who could not be with us 

today, the President and CEO of Opportunity Finance 

Network.

Jonathan Mintz, the President and CEO of 

Cities for Financial Empowerment.

Jennifer Tescher, the President and CEO 

of the Financial Health Network.

Christina Tetreault, the Deputy 

Commissioner for the California Department of 

Financial Protection.

And Raphael Bostic, who can't be with us 

today, the President and CEO of the Federal Reserve 

Bank of Atlanta. 
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This is really an extraordinary and 

diverse group of people that bring a lot of 

perspectives to bear on the issue of concern for this 

Committee. 

And let me at the outset also acknowledge 

that taking part in our meeting today is acting 

Comptroller, Michael Hsu, and we're going to be 

joined I believe later in our meeting by another 

Member of our Board, CFPB Director, Rohit Chopra.

And joining us at the outset of our 

meeting is CFPB Deputy Director, Zixta Martinez. Let 

me briefly summarize the agenda for our meeting. 

We're going to start by taking advantage 

of the participation of our Committee Members and 

have a roundtable discussion asking each of them 

briefly to share their thoughts with us on the current 

situation and its consequence for expanding access to 

the financial system.

 After the roundtable discussion with our 

Committee Members, we're going to have a panel 

discussion on the timely issue of bias in the home 
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appraisal process, which I think is now widely 

recognized as a important dimension or vehicle for 

discrimination in the mortgage market.

It's been the subject of extensive 

attention by the PAVE taskforce, and PAVE stands for 

the property appraisal valuation equity program that 

was undertaken. 

Participation by a range of federal 

agencies and the person who really led the Staff work 

for that PAVE report, Melody Taylor, was the Regional 

Director for the Mid-Atlantic Office of Fair Housing 

and Equal Opportunity at HUD is here with us to take 

part in that panel.

And in addition to Melody, we have 

Maureen Yap, the Senior Counsel at the National Fair 

Housing Alliance, and Kenon Chen, the Executive Vice 

President for Corporate Strategy at Clear Capital.

We'll have a range of perspectives by 

deeply knowledgeable people on this important 

subject. So, that'll be the first panel after our 

roundtable discussion, and following that, we'll have 
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a panel of FDIC Staff to talk about the notice of 

proposed rulemaking on the Community Reinvestment 

Act, CRA, which was issued by the three bank 

regulatory agencies, the Fed, the OCC, and the FDIC 

at the beginning of May. 

This is an ambitious proposal, I think it 

is actually I would view it as a landmark proposal in 

terms of expanding the reach and impact of CRA to 

improve access to credit, investment, and basic 

banking services for low- and moderate-income 

communities across the United States, both urban and 

rural.

It's an ambitious proposal, quite 

complicated, and it'll be a nice opportunity for our 

Staff to lay out the key elements of the proposal and 

an opportunity for us to get feedback from our 

Committee Members on the proposal. 

I very much look forward to that 

discussion. 

I think it's an excellent program that we 

have prepared for you all today and before I turn the 
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program over to Liz to begin the roundtable 

discussion, I'd like to ask my fellow Board Member 

Acting Comptroller Hsu if you'd like to make a comment 

as well?

DIRECTOR HSU: Sure. Thank you so much, 

Marty, I'll keep it really short. 

I've been really looking forward to this 

because I recall doing this meeting last year and 

just the range of perspectives in this kind of 

intimate setting is really, really valuable. 

It was a thoroughly enjoyable and 

informative and insightful discussion so I'm looking 

forward to it today. Again, I apologize in advance 

I am going to have to hop at 2:00 p.m., so hopefully 

we can get through the roundtable.

But the agenda looks fantastic, very 

timely, and I had posed some questions last time. 

One question, I think it builds off of 

where Marty was going, given where what are we in the 

economic cycle, I'd be curious to hear how is that 

impacting folks' thoughts on issues of inclusion as 
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we enter higher rates and a more volatile 

environment?

It would be great to hear people's 

perspectives on that. Thank you. 

ACTING CHAIRMAN GRUENBERG: Thank you, 

Mike, and thank you for being here today. If I can 

ask Zixta Martinez, the Deputy Director from the 

CFPB, did you want to make a comment?

MS. MARTINEZ: I do, thank you so much. 

I actually have a few comments I'd like to make. 

First, I want to thank you Acting 

Chairman Gruenberg for holding today's meeting on 

economic inclusion and second, I want to agree with 

Comptroller Hsu with respect to the range of topics 

and diversity of views here reflected. 

I do want to share some remarks and in 

particular, I want to focus remarks on the need to 

increase access to affordable payments, credit, and 

other financial products and services. 

One of the most signature drivers leading 

us to double down on our efforts to broaden access is 
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the expansion of electronic payments. Electronic 

payments are quickly supplanting cash and are now an 

essential part of the economy.

Their increasing omnipresence came in 

full view during the pandemic as the un and 

underbanked faced considerable challenges, making 

purchases and receiving payments, including the 

economic impact payments. 

And banks have both an obligatory and 

leading role to play in this effort. Chartered banks 

are granted unique powers and privileges not 

possessed by ordinary commercial firms.

Banks are special, they have access to 

Federal Reserve system liquidity and enjoy the FDIC's 

guarantee on insured deposits. 

Depositors are assured their money is 

safe and banks are therefore able to attract large 

volumes of deposits that their customers treat as 

cash. This provides banks with a valuable source of 

low-cost stable funding. 

It is then neither a surprise nor a tall 
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order that the Government expects banks to meet their 

statutory requirements to serve a broad range of 

communities and customers. 

By meeting their obligations to increase 

banking access and reduce banking and financial 

inequities, banks can play a key role, for example, 

in reducing the persistent and growing home ownership 

gap between black and white families and closing the 

economic gap between the banked and the under and 

unbanked.

Indeed, considering the significant 

benefits banks derive from their unique relationship 

with the public, banks should ensure that arbitrary 

customer-level revenue or profitability targets do 

not impede lower-income household access to 

affordable banking products, including the most basic 

of all, a checking or savings account.

Achieving this most basic access will 

require offering low monthly fees and further 

reducing the cost of overdraft and non-sufficient 

fund fees, while still providing lower-balance 
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customers flexibility to help manage their expenses. 

And serving consumers in all areas of the 

country, including in banking deserts, in rural 

areas, and within communities of color. 

Director Chopra as a Member of the FDIC Board 

recently voted in support of an effort to update and 

modernize the Community Reinvestment Act's regulatory 

framework. 

First, the proposal takes steps to 

address past problems with grave inflation on the CRA 

exam, which almost every bank currently passes. 

Second, the proposed regulatory 

framework will eventually rely on small business 

lending data, which will allow for a more in-depth 

understanding of small business lending issues and 

include detailed data broken down by race and 

ethnicity. 

Third, the proposal would increase 

incentives for banks to finance community development 

projects in areas experiencing persistent poverty as 

well as areas with low levels of past community 
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development, financing, including in banking deserts.

The proposal also includes explicit 

incentives for community development financing and 

services in native communities. 

Finally, the proposal would recognize 

banks that assist low and moderate-income communities 

with clean energy transition and climate resiliency. 

For example, Native families who depend 

on farming for both subsistence and commercial gain 

face increasing threats from drought, flood, and 

rising temperatures, with limited resources at their 

disposal to invest in climate mitigation solutions. 

Overall, the proposed CRA rule would help 

put low-income communities on stronger financial 

footing and provide people with increased 

opportunities to access financial products and 

services that can help purchase homes, start small 

businesses, or otherwise build financial wealth.

In addition, the CFPB is working to 

ensure that banking access and access to credit is 

not unfairly affected by algorithmic models. 
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Along with other federal financial 

regulators, we will be working to implement a dormant 

authority in federal law to ensure that algorithmic 

home valuations are fair and accurate.

We also release guidance to lending 

institutions confirming that it is unlawful to use 

black box models that do not allow for clear 

understanding of adverse actions such as denial of 

credit. 

Adverse action notices are an important 

part of the Equal Credit Opportunity Act, both 

because they serve as a consumer education tool and 

because they are an important deterrent. Thank you 

for the opportunity to provide some remarks.

I am looking forward to today's 

conversation. 

ACTING CHAIRMAN GRUENBERG: Thank you, 

Zixta, and I'll turn the program over to Liz and begin 

our roundtable. Liz, it's all yours. 

MS. ORTIZ: Thank you, Marty. It's my 

pleasure to introduce the Members roundtable. 
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Each ComE-IN Member is invited to spend a few 

minutes sharing with us some observations, 

challenges, as well as successes and opportunities 

that they as leaders in their organizations are 

actively pursuing.

You are an amazing group of committed 

practitioners and professionals and so I expect this 

dialogue to spark a host of great ideas that we can 

all build on together to advance economic inclusion.

So, I hope nobody feels too much pressure 

going into this. We will go around the virtual room 

in reverse alphabetical order. 

Each of you can hand it off to the next 

Member and I recognize that our brains don't 

necessarily automatically work in reverse 

alphabetical order so I'm here to help if you don't 

remember who is coming after you. 

And if we have some time left before the 

first break, I'll try to pull out a couple of themes 

for folks to maybe discuss or to put on the table for 

further exploration at future meetings of the 
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comment. 

With that, Christina Tetreault, can you 

start us off? 

MEMBER TETREAULT: Thanks, good morning, 

good afternoon, everyone, I'm going to talk about 

something that is really big here in California in 

May. California's Governor, Governor Newsom, issued 

a crypto asset executive order.

The executive order takes a whole of 

California Government approach and it ensures that 

California is aligned with our federal colleagues. 

It's an opportunity for the Department to provide 

regulatory clarity using our existing authorities. 

We are particularly interested in 

understanding crypto assets and financial inclusion. 

We have an outstanding invitation for comment. 

We are eager to get written responses to 

that comment, and so I will leave you with the fact 

that it closes August 5th and we look forward to 

hearing from people.

With that, I will close and hand off to 
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Jennifer Tescher. Thanks. 

MEMBER TESCHER: Christina, that was so 

short I wasn't prepared. Good morning, good 

afternoon, everybody, it's so nice to see everybody 

even if it's by video. I'm going to touch on a few 

important pieces of research that we've put out in 

the last few months.

I think the common theme among them is 

that they're focused on cost, they're focused on how 

much people are paying. So, earlier this year we put 

out our annual fin health spend report. 

Our spend report looks at how households 

manage their finances and access credit. 

And we do this annually so we essentially 

look at in 2021 how much people spent in total on 

interest and fees on a range of more than two dozen 

financial products and services. 

Everything from credit cards to mortgages 

to student loans, quite an array. 

And we're able to look at trends year on 

year, we're able to look at product by product, and 
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we're also able to disaggregate the data based on 

race and ethnicity and also based on financial health 

status.

So, I want to just give you a little bit 

of a snapshot. All of the research is available on 

our website for free and you can peruse it at your 

leisure. 

In 2021, spending on interest and fees 

was $305 billion. 

That's a decline, a decline from a high 

of $319 billion in 2020 and the biggest reason for 

that decline, not surprisingly, was COVID-19 and the 

impact that the moratorium on student loan repayment 

had and on credit card balances declining. 

A combination of less spend but also 

people paying down credit cards given the influx of 

relief money that many people received. So, that 

largely explains the decline.

But as you well know, we can't just look 

at the top line, we've got to dig underneath it and 

the disparities in fees, interest paid by race, 
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ethnicity, and income continue to be significant. 

So, on average, black households spent 

more than twice what white households spent on 

interest and fees as a percentage of their income. 

So, for black households they spent 7 percent of their 

household income on interest and fees for financial 

services.

Whereas for white families that was 3 

percent, and for Latinx households it was 5 percent. 

Households with low to moderate income spent nearly 

three times more of their income on interest and fees 

than higher-income households did.

So, they spent 8 percent versus 3 percent 

for higher income households. 

And you can look at that breakdown for 

all of the different products, I'm not going to go 

through all of them here but I do want to touch on 

one in particular that has been the subject of a lot 

of interest, a lot of engagement by some of the 

regulators on this call, and by the banking industry,

and that's overdraft and NSF fees. 
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So, between 2020 and 2021, overdraft and 

NSF fees remained recovery steady year over year. 

They totaled about $11 billion and it 

makes sense that even though we've seen significant 

changes, positive changes, by the industry, those 

really didn't start to take effect really until this 

year. 

So, we should see some change when we 

measure again next year for this year's numbers. But 

it is interesting to note that in 2019, just to give 

a little bit more of a sense of time, overdraft and 

NSF fees totaled $15.5 billion.

So, again, I think, we know we've seen a 

gap in overdraft and NSF over the last two years 

because of COVID-19. At first there was a moratorium, 

a lot of institutions were waiving those fees and 

then there was also just less spending going on.

So, again, for both of those reasons, 

it'll be interesting to see how much we see it 

increase this year just because of the economy pick 

up and how much it will be counteracted by the changes 
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that institutions have made.

But I think it's important to note again 

that black households with bank accounts were 1.8 

times as likely as white households to report having 

paid at least one overdraft. 

And Latinx households were 1.4 times more 

likely. And sort of not surprisingly, financially 

vulnerable households with bank accounts were nearly 

10 times as likely to overdraft as financially 

healthy households. 

The other things I would point out that 

you might want to look at is through this research we 

also put out a separate brief on Buy Now Pay Later, 

a relatively new product in the market that I know 

there's a lot of interest around.

There isn't a ton of great data and the 

data that we have is pretty good. It doesn't get us 

all the way there in terms of what we need to know 

but there are some interesting stuff in there.

You know we also, one of the products 

that we always look at is credit cards and interest 
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in fees on revolving balances for both general 

purpose and private label cards declined in 2021, 

again because stimulus payments from the government 

benefits enabled folks to pay down. 

But the trends we were seeing in cards 

got us curious and my colleague Cory Stone and I 

actually just published a separate paper on brookings

in which we look at revolving credit card balances 

and the challenge that those posed to financial 

health.

And we make some suggestions about 

different ways we might think about structuring the 

repayment structures. 

Just to give a little bit of data, 

revolving card balances, so the balances that people 

carry when they're revolving their credit cards 

account for about 15 percent of all non-mortgage 

debt, but they account for the largest share of nonmortgage interests and fees paid.

Because credit cards are just more 

expensive than auto loans, student loans, other 
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things that make up significant portions of nonmortgage debt. About half of the cardholders that 

are revolvers make monthly payments at or close to 

the minimum.

And they account then for the majority of 

the revolving balances. 

And there's some research that the CFPB 

has done in the past that shows that in a significant 

amount of long-borrowing episodes, meaning when 

people are revolving for months and months and 

months, the amount owed increased beyond the amount 

they initially borrowed.

Heavy revolvers who carry an unpaid 

balance in more than half of all months equal 40 

percent of all outstanding balances over the 18-month 

period beginning January 19th, but they paid 85 

percent of all the finance charges. 

And there have been lots of things that 

folks have done over the years to try to encourage 

people to pay down their debt faster, but the one 

thing that hasn't gotten a lot of attention and that 
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we focus a lot of attention on is the minimum pay 

formula, which today is the greater of 1 percent of 

your end-of-month balance or floor amount. 

And I don't have time to go into great 

detail but we ended up with the low minimum balance 

amounts from some financial regulation that the 

federal regulators put into place in 2003 when they 

wanted end negatively amortizing credit. 

Because some credit card lenders were 

offering minimum payments below zero percent and so 

from a safety and soundness perspective, the idea was 

if that's not really good, we want to make sure that 

banks are actually getting people to make payments 

for the safety of the system. 

But we didn't really think about the 

financial health of the consumer in that equation. 

And so the guidance right now is that minimum payment 

has to amortize the current balance over a reasonable 

period of time. 

But there's no definition of reasonable, 

and if you look at some of the data I shared and some 
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additional data, I would suggest that the length of 

time that some people are carrying those balances 

really isn't reasonable.

And they're not able to pay it off. And 

so we go through and look at several different 

scenarios for altering the minimum pay formula, 

everything from just raising it from one percent to 

something higher, to installmentizing each purchase, 

which some large financial institutions already 

offer. 

A newer credit card company called 

Upgrade, this is what they do. 

And then the third option, which I think 

is the one I'm particularly fond of, which is changing 

the formula itself because right now, if it's 1 

percent, let's pretend, of your balance, it's your 

end-of-month balance. 

And so that means the amount of money 

you're paying on your credit card is declining every 

months as your principal balance declines. And your 

principal payments aren't level so you're making a 
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smaller amount of principal payments every month, 

which is part of why it's so slow. 

Imagine if your mortgage worked that way. 

So, I think it would be interesting to 

think about changing the formula so instead of you 

making a minimum payment based on the percentage of 

your month-end balance, it should be tied to your 

total credit line, which is how, frankly, we're 

underwriting consumers for those credit cards in the 

first place. 

So, it also sort of aligns end to end. 

This is something I would love to talk about more, 

lots of interesting food for thought but this is 

absolutely within the purview of federal regulators. 

There's a number of different ways they 

could approach it. We put out a great medical debt 

report, I'm only mentioning it because I don't have 

time to talk about it now but it's such an important 

issue.

It was noted in President Biden's 

executive order on the topic and so we have some 
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interesting data there. And then finally, our new 

financial health pulse data will be out at the end of 

August. 

I raise that now because I know in 

October I think on the agenda is getting to hear from 

the FDIC about its latest un and underbanked survey 

data. It might be an interesting opportunity to 

compare and contrast. 

I will tell you that our data was 

collected six months after the SHED, the Federal

Reserve SHED data was collected. 

And our top line findings is going to be 

different from theirs because that much has changed 

just in six months with the decline of COVID-19 aid, 

a variety of other things happening in the economy. 

We are starting to now see the decline, 

is are a little bit of the challenge and stress on 

financial health. So, more to talk about there but 

thank you so much for the time. 

MEMBER MINTZ: I think I'm up next, 

Jonathan Mintz with the CFE Fund. I'm delighted to 
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be here, it's really an honor, and I look forward to 

it all the time even if it's not in person this time.

I'm going to limit my comments, not 

surprisingly, to BankOn and talk a little bit about 

the cutting edge of where we're pushing some exciting 

boundaries. As a little bit of background, as of 

this morning we were at 248 certified accounts.

There are another couple dozen in the 

mix. Thanks to our friends at the FDIC, we know that 

the banks who makeup that 248 and it's also credit 

unions, comprise 56 percent of the U.S. deposit 

market share. 

Certified accounts are now available in 

just under half of the Branches across the country, 

lots of progress and a lot of that progress is due to 

folks on this WebEx but also to our partners across 

about 90 coalitions in this country at the local 

level, the regional level.

We've got a bunch of state coalitions 

starting so lots of important partners. I want to 

just talk about three things during my five minutes, 
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one is I want to talk about where we are on scaled 

banking access integrations. 

Second, I want to talk about two new 

populations that we're talking about connecting to, 

as populations that we're excited about. And then I 

want to talk about a new front in our banking access 

work which is direct digital advertising and how 

that's going.

So, on scaled banking access 

integrations, I see Brandee on my screen and I have 

to point out, as you all have heard me say many times, 

that our first really large approach to inserting 

banking into programming with payments was Brandee's 

brainchild, which is our Summer Jobs Connect program 

that Citi's been so supportive of now for nine 

summers. 

So, that's really exciting and I think 

it's really taught us a lot through our partners about 

how to approach large-scale integrations of getting 

people into certified accounts as part of their 

payment streams, rather than just generically through 
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financial education. 

We have spoken before I think at our last 

meeting about the really exciting partnership that we 

had with the FDIC and the IRS and the CDC regarding 

the stimulus payments and the ability for people and 

the encouragement and the direction of people to open 

up certified accounts to be able to get their stimulus 

payments safely and quickly. 

That's very exciting and I won't repeat 

that. The cutting edge for us at the moment on largescale is unemployment payments. We're 

working with several states, the first one out of the 

gate has been Maryland, who have discontinued the 

default approach to unemployment payments through pay 

cards, overspending cards, and instead are actively 

encouraging program recipients to give them account 

information to get direct deposit, and if they don't 

have one, to then steer them directly to the range of 

hundreds of BankOn certified accounts that they can 

choose from in order to safely do so.

We really think that unemployment 
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payments represent an important investment in 

thinking about scale, not just because of the number 

of people that are reached but also because of the 

nature of unemployment benefits, which are periodic. 

And that periodic use of the account, we 

have all learned I think in this group, is key to not 

just getting people into banking but having banking 

become a natural practice. 

So, we're very excited about that, very 

grateful this happened. 

I really have to shout out to our 

partners in BankOn Maryland, which is led in that 

jurisdiction by Maryland CASH, for those of you who 

know them, who really had a wonderful partnership 

with the Maryland Department of Labor regarding 

discontinuing the pay cards and switching to banking. 

We're very excited about that and I am 

literally I think preaching to the choir when I say 

we know that, according to FDIC research, those who 

are unemployed are four times more likely to be 

unbanked. 
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So, this is a real key target and our 

ability to push this out to multiple states is very 

exciting. The second thing I mentioned is I want to 

talk about two new populations that we're focusing in 

on.

The first is veterans and the second is 

foster youth service recipients. So, we partnered 

with our friends at the FDIC again and the Association 

of Military Banks of America and the Veterans Affairs 

Department. 

And we are now, Veterans Affairs folks 

are now actively pushing out BankOn accounts for the 

moment on benefits but as is our Trojan Horse 

strategy, we're obviously aiming towards that also 

becoming true of salary. 

It's early days on this effort but the 

traffic has been pretty steady and significant on the 

resource page that we helped the VA put together. 

We think this is a population again well 

worth investing in of course and we're just thrilled 

at the ever-increasing sense that both State and 
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Federal Government agencies feel confident relying 

upon the good housekeeping nature of a BankOn seal 

and so we're looking forward to more progress with 

that population. The other population which 

I have been struggling to figure out an opportunity 

to reach for over a decade is foster youth. 

We're focusing in on some work in 

Milwaukee that we're funding in partnership with 

nearby BankOn Chicago that's developed an expertise 

around trauma-informed financial education and 

coaching and the Economic Awareness Council. 

So, we're working with and funding two 

nonprofit organizations in the Milwaukee area. 

BankOn Milwaukee is of course helping with the 

account end of this programming partnership and there 

are two subpopulations of foster youth that we're 

working with. 

One is the youth that are aging out. So, 

some nonprofits that serve foster youth have 

custodial accounts that they keep for these kids 

while they're in the program. Those custodial 
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accounts are closed when kids age out and so this is 

an important time.

And given that there are payments that 

are part of the aging out process in foster care, we 

think it's also an effective time, just in time, to 

get folks into safe accounts that they can use to 

launch their adult lives.

The second subpopulation of foster youth 

that we're working with are those that are in 

residential treatment programs and connected 

workforce opportunities and again that represents a 

population that has a connection to money in a way 

that allows us to leverage that banking access

moment.

In the groups that we're working with in 

Milwaukee, about 85 to 90 percent of them are 

unbanked. Moving onto my last point, which is digital 

advertising, I think some of you know I've mentioned 

before that we really wanted to begin this with 

communications research.

We outsourced focus groups and surveys in 
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four different cities and zeroed in on what kinds of 

messaging really resonated with people who are 

outside of the banking system and what motivates them 

to get back into the banking system.

I talked a little bit about that before 

so I won't go into detail. I will just say that 

BankOn, the national movement, and through our 

partners across the country engaged in some pretty 

significant digital advertising investments.

The short story, because I can read Liz's 

eyes, is that these ads, and we're doing it through 

social media, we're doing it through Google search 

ads, these ads are all outperforming industry 

benchmarks and what that tells us is that using the 

right language and finding people at the right moment 

works.

And people are not just spending time 

looking at the ads but they are also clicking through 

too -- we've set up a single national site that really 

focuses in on the couple three dozen of our certified 

partners who allow people to open up an account even 
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if they're a new customer to that bank or credit 

union.

So, it's one click and you're in and you 

can open your account basically. 

And the hit rate of people that are 

watching the ads coming to the website spending on 

average over 10 minutes reviewing the information on 

our website, and then clicking through at about a 

third depending on how they get there to our partner 

organization to open up those accounts tells us this 

direct advertising approach is well worth the 

investment. 

And I also just couldn't stop without a 

quick shout-out to the FDIC Get Banked campaign. 

90 percent of the traffic that comes to 

us from somebody else's website comes to us from your 

Get Banked work and we think the investment makes a 

lot of sense and is one we're going to continue to 

explore. 

Thank you. I think I'm followed by 

Brandee.
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MEMBER MCHALE: Yes, here I am. Thank 

you for the opportunity to join the Committee and to 

be here with you all today. As a new Member, I'm 

really honored and excited about the chance to both 

share my own institution's experience but also to 

learn from others.

And I want to thank the Acting Chairman 

and the leadership team at the FDIC for the 

opportunity. I know we're short on time but I just, 

I think, I know you all know this, there has never 

been a more critical time to address these issues.

It is a period of extreme economic 

volatility but it's also a period of financial 

inclusion and innovation that's really energizing to 

see. Innovation is being driven across the financial 

services ecosystem.

We heard many of these examples. But the 

thing I want to really point out is that the 

innovation is being driven in two fronts by focusing 

on the what, what are the needs, understanding what 

works, and then translating that into the how, how 
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can we do more of that? 

We're making more data available, again 

deepening our knowledge of what's happening to 

households, as Jenn Tescher spoke about a few minutes 

ago. 

And certainly, convenings like this that 

bring together leaders to share ideas and to crossfertilize ideas is an important accelerator.

And also important to eliminate those 

barriers that are in place that are keeping us from 

closing income and wealth gaps in our country. 

I think this work is even more imperative 

when you look at where the wealth gaps are the 

greatest, for communities and households of color and 

especially for black households.

Despite, though, all the innovative work 

that we've been doing, the trend is worsening. 

I was really taken aback reading a paper 

issued a few weeks ago by the National Bureau of 

Economic Research that shows that in fact, the racial 

wealth gap isn't closing, it's on track to grow. 
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And so we have to ask ourselves, is our 

innovation actually driving effectiveness? Is it 

actually driving the impact that we want? I say all 

this because it's definitely not a time to give up. 

I think it's a time to double down but if 

we're going to change this trajectory, a business as 

usual approach just isn't going to work. 

And with this in my mind, we at Citi 

launched Action for Racial Equity, it’s a $1 billion 

in strategic initiative to promote financial 

inclusion and asset building and help close the 

racial wealth gap. 

This is not driven or organized using our 

traditional community investing or philanthropic 

approaches. There are important philanthropic 

programs in this effort.

But rather than think about this as a 

standalone program or a vertical that we're building 

within the bank, we stepped back and said what if we 

looked across the institution?

How do we leverage a whole wide array of 
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resources simultaneously? How do we work 

horizontally across the bank to center racial equity 

in our products, our people, procurement, and our 

philanthropy to build financial health and assets?

This includes, just to give you a few 

examples, I have to build off of some of the 

commentary earlier and I'm proud to say that we went 

live this past weekend and have eliminated overdraft 

fees, returned item fees, and overdraft protection 

fees that can have such a detrimental impact on 

consumers with the least ability to absorb an 

unexpected expense. 

We've been scaling up product 

distribution partnerships like some of the ones that 

Jonathan spoke about, working with national 

nonprofits, but also affordable housing developers 

and municipal partners, not just to increase access 

to products. 

But really, we're designing these efforts 

to help address the underlying trust gap that still 

exists between banks and underserved communities, 
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bringing more families into the financial mainstream 

by launching new children's savings programs. 

We've had San Francisco's kindergarten 

college effort in place for a decade and we are seeing 

now a plethora of program replications. We just 

announced new efforts in places including Los 

Angeles, San Jose, and Atlanta. 

These programs make it easy to access 

banking services and build banking habits at a young 

age and we hope that as a result, these young people 

and their families will remain banked throughout 

their lifetime. 

And we're going all in to ensure CDFIs 

and MDIs have the capacity that they need to leverage 

the unprecedented level of public dollars available 

to them. 

This includes committing $50 million from 

our foundation to fund human capital and technology 

investments in these institutions, working with our 

institutional side of the bank, our institutional 

clients to identify revenue generation opportunities 
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for MDIs. 

And then placing senior executives from 

across the bank in residence at MDIs to share 

expertise. None of these examples and the other 

things that we're doing on their own none of these 

are really brand-new ideas. 

But we believe we're taking a brand-new 

approach by working comprehensively on these issues. 

This isn't just about doing more, it's 

about doing things differently, and it also means 

being willing to ask ourselves this hard question, 

are we actually making a difference?

And so last October we announced, and we 

are in the middle right now of, a third-party led 

racial equity audit to assess our action for racial 

equity effort and help deepen our understanding of 

not just how Citi but how the broader financial 

services sector can help close the racial wealth gap. 

The recommendations of that audit will be 

published later this year. In the interest of time 

I won't go into this deeper but I'll just point out 
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one final thing before I close that I think is 

important for this Committee.

The work that we've done through our 

assessment to date has reinforced that the economic 

challenges we're facing require both comprehensives 

and collaborative solutions. 

This means not just working alongside one 

another but we've got to look for ways we can deepen 

our collective commitments in the financial services 

sector and establish shared common goals so the sum 

is greater than the parts. 

And as the Committee works together to 

review regulatory financial and social issues that 

have kept us from achieving our objectives, I'm 

optimistic and hopeful that the work that this group 

does will further drive that collaboration and 

coordination and help ensure the solutions we 

champion can move us from dialogue to action and from 

individual action to collective impact and systemic 

change. 

Thank you. I'm going to turn it over 
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Margaret Libby.

MEMBER LIBBY: Thank you, Brandee, and 

hello, good morning, and good afternoon, everybody. 

As Brandee said, I'm Margaret Libby, I'm the founder 

and CEO of MyPath. 

We are based in San Francisco but working 

nationally really to make sure that BIPOC, youth of 

color and young adults of color growing up in 

low-income communities have access to banking, 

credit-building opportunities and also opportunities 

to save really to facilitate a strong start to make 

sure that they can get on a path to wealth-building. 

That's really what our work has been 

about, so it's really been an honor to be part of 

this Committee and be able to share the lessons that 

have come out of our work and some of the best 

practices and emerging issues that we're seeing but 

also that young people are telling us about.

Because that's another important part of 

our model, really not just engaging young people in 

banking, savings, and credit-building but in 
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leadership and advocacy around these issues and the 

policy issues that are in place that can be changed 

in order to facilitate even more youth financial 

inclusion.

And so yes, it's a real honor to be part 

of this group and to be able to bring some of the 

ideas that they have surfaced in the last couple of 

years to this table and to the members of the group.

So, yes, I very much appreciate the 

comments of the Members thus far and I look forward 

to the rest of the conversation. I think the three 

things that I wanted to focus on today, and Liz, I 

actually I thought I had a timer going because I 

really wanted to be right on time.

But I want to share a little bit I think 

about a youth economic bill of rights that our 18 to 

24-year-old youth advocacy group has put together and 

then a little bit about some of the emerging issues 

that they're identifying in places where they're 

excited to engage I think with the CFPB, with the 

FDIC and others to really be part of some of the 
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solutions that they've identified through the youth 

economic bill of rights. 

But I want to start with this idea that 

really, as I mentioned, our early work was about 

banking and banking access for young people. 

And I think one of the pieces that came 

out of that which was almost like a precursor to this 

youth economic bill of rights was our MyPath youth 

banking standards, which were really designed to get 

at what is a quality and accessible bank account look 

like for young people? 

And so drawing on the great work that the 

FDIC has done around safe accounts, which certainly 

I think was a lot of the foundation for BankOn, BankOn 

2.0, together with our young people we drew on all of 

that work to then say there's a couple of additional 

pieces that need to take place in order for youth to 

have access. I think this is for foster youth, it's 

for other systems-involved youth, youth who have 

undocumented parents. 

There are a number of youth in low-income 
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communities for whom just having a safe and quality 

account isn't enough, but making sure it's noncustodial is critical. 

And making sure that they can access an 

account with an alternate I.D. like a school I.D. is 

core to them accessing the banking system. 

And we think, and our young people feel 

strongly, this is actually one of the economic rights 

in the document they've put together, is to build a 

national model of banking that will really ensure 

there's access points for those young people who are 

vulnerable to predatory financial services without 

those two additional steps taken. 

And so that's something that we are 

excited to continue to have conversations with this 

group around, is really to make sure there is that 

strong on ramp to the financial services system so 

that we're positioning young people to start strong, 

have access to the services, the education they need 

to really get on that path to wealth-building.

So, that's one thing and I'll say we are 
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very proud that through that early work that we did 

and spreading it to cities and partners I know, and 

then groups like Jonathan have really been able to 

scale those best practices in that approach to 

thousands of young people across the country.

And so that's something that our young 

people are very proud of. So, the second thing I 

want to talk about is this youth economic bill of 

rights. 

As we pushed out this banking saving 

credit building work, our young people and our team 

really wanted to see a document that would really be 

even broader to look at what is the whole set of 

things that young people, young people of color from 

low-income communities really want to see in the 

economy to ensure that as a country, with an equity 

lens, we are really providing the footholds that they 

need to transition in a strong way from being young 

people into their adult lives into the financial 

system and the economy.

And so the banking piece is one and 
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another one that is in there is a guaranteed income, 

another one is access to financial mentoring and 

access to their credit information.

I think the combination of access to the 

credit information and financial mentoring is 

something that we have really taken on as an 

organization. 

And Jonathan, I was really excited to 

hear you talking about foster youth because one of 

the things that we've done in order to put this bill 

of rights or this economic bill of rights into 

practice and start to demonstrate the impact of the 

kinds of ideas that young people are putting onto 

paper in this document is to provide financial 

mentoring that has a youth development and a traumainformed framework embedded in it to add that to the 

first guaranteed income pilot for emancipating foster 

youth in the country. 

It's something that the County of Santa 

Clara is doing. So, two years ago we began adding 

that financial mentoring component as an option so we 
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saw a number of the participants opt in and really 

maximize the impact of that income. And so it's 

another one of these moments where there's money for 

an offering like financial mentoring to really 

resonate with young people. And we have a white paper 

that's forthcoming that will share some of what we 

learned about that integration.

And as counties across the State of 

California are applying to embed their own guaranteed 

income pilots through a pot of money that the state 

is making available, we think that more of this 

financial mentoring will be a component of those. 

So, enabling access to banking, access to 

credit-building opportunities for some of our most 

vulnerable young people.

So, we're excited about that pilot. I 

think as I start to run out of time, the thing I'll 

say, the other sort of idea embedded in the bill of 

rights is the idea that youth of color from low-income 

communities really want to be part of the design of 

the solutions to address the ideas they've put 
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together in the bill of rights.

So, even thinking about what education 

should look like if we're trying to make sure that 

young people who are largely being targeted by and 

engaging in a market like crypto are part of designing 

the education materials and the dissemination 

strategy so that we're really getting at the young 

people who are using and investing in crypto and 

really looking at some of the other emerging issues 

like Buy Now, Pay Later. 

So, with that I will turn the mic. 

Everybody has been so good about knowing who's next 

and I will confess that I am not entirely sure that 

I know who I'm handing it off to.

But, yes, I'm really excited to continue 

to engage with all of you on these fronts. Thank you 

and I will go back to Liz and --

(Simultaneous Speaking.) 

MEMBER KELLY: I'll take the ball, Libby, 

thank you so much and good afternoon, everyone, I'm 

Kenneth Kelly, it is such an honor and a pleasure to 
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serve with you. 

I just want to thank our Acting Chairman 

for his leadership on this effort and also to the 

fellow Board Members. Again, I'm Kenneth Kelly, I 

serve as Chairman CEO of First Independence Bank 

based in Detroit, Michigan. 

Our bank actually was started because it 

was one of the positive outcomes of the 1967 riots in 

Detroit. We've been in business now 52 years with a 

focus on creating wealth in the African American 

community.

We were fortunate enough to really open 

up a new branch this year in Minneapolis. I think 

many of you know the hurt we saw around the world in 

what took place with George Floyd's murder. 

And so we've been fortunate enough to 

open a bank branch there. I want to spend a few 

moments to talk about just a couple of things before 

I close. 

One, a little bit more about who we are 

and talk about what happened there in Minneapolis 
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because I think it is a cornerstone of what we're 

going to need to tackle the problems that I've heard 

thus far from my colleagues. 

Number two, to substantiate the topics 

that we're going to hear about a little bit later on, 

the appraisal process and CRA, and then the last item 

I'll close with real quickly is talking about this 

financial literacy issue that started with one of the 

opening comments.

So, again, who we are, started in 1970 

with a focus on ensuring that there were banking 

services in the African American community. 

One of our founders two years ago said to 

me, one of the beauties of us starting that bank back 

in 1970 was that African Americans started to get 

jobs in the larger banks aside from being a janitor 

and a teller. 

And so I say that to say collaboration 

and partnership can work hand in hand. What we saw 

take place when we moved into the Minneapolis market, 

there were five banks there and I want to give all of 
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them credit because it is the collaboration that you 

just heard Brandee discuss from Citi that we're going 

to need tackle these issues.

And those banks include Bank of America, 

Bremer Bank, Huntington/TCF, of course they've 

combined now since that time, U.S. Bank and Wells 

Fargo. And they came really with open arms and 

allowed us to basically go and move into that market.

Those five banks constitute roughly 80 

percent of that market and as you know, you have seen 

how the social unrest that has taken place, and not 

just with George Floyd's murder but with what has 

happened subsequently. 

Why I bring that up is not only just about 

ribbon-cutting and showing that we've moved into that 

market but there's also now a change in discussion 

around home ownership in that market. 

Unfortunately, Minneapolis has one of the 

highest home ownership gaps in this country between 

Caucasians and African Americans, almost a 50-point 

gap. 
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There are discussions now beyond the 

banks that also include public officials, looking at 

how do we tackle that market because all of us know 

that home ownership is one of the greatest 

contributors to wealth for a family.

And so I want to bring that up because 

that's I think a model that we've got to figure out 

how do we lean into collaboration and partnership to 

tackle some of these problems?

And it shows up in one of the previous 

comments of one of our peers. I saw where the 

appraisal demographic is 97 percent white and 

practically all male. 

That is a challenge and I think we have 

to figure out how do we look at leaning into that in 

creating educational opportunities and creating an 

awareness to increase the diversity on the appraisal 

side. 

And so when we deal with those outcomes, 

they come with all the preconceived notions that we 

all bring to the table. And so I just want to 
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challenge us to think about how do we lean into that 

and challenge that?

On the CRA side, I mean this is probably 

the chance of not one generation but maybe three. We 

saw the last CRA take place back in 77, if I recall 

correctly, and here we are in 2022.

So, the likelihood of it changing again 

might be fairly slim and my point is let's certainly 

lean into that and see how do we create opportunities 

where banks are not just confined to geography 

anymore. 

There's affinity, there are other 

boundaries that we have to look at how do we encourage 

the outcomes that we so deeply desire that we heard 

thus far today? 

And then my closing remark is around this 

topic of literacy. I'm happy to say the State of 

Michigan just passed a bill and the Governor I believe 

has signed that, making us the 14th state to require 

some form of financial literacy inside of the school 

system. 
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I believe it is required that they'll 

take the equivalent of what I would call or remember 

as a semester -- it's been so long ago -- of financial 

literacy. And I think that's a topic that we ought 

to push.

Academia and the intent of having people 

go and be productive in society is great, but if they 

can't leverage what they're being productive with, 

then I think we missed the boat.

And we see that it's more expensive for 

those at the less fortunate end of the socioeconomic 

pyramid. 

So, I want to just encourage us to look 

at those as opportunities where we can make change 

and continue to lean into that in a group that is not 

only partnership-based but certainly collaborative. 

So, at this point in time I'd like to 

conclude my comments and call on Tom Foley.

MEMBER FOLEY: Thank you sir, I 

appreciate it, and I really appreciate the 

opportunity to be here with all of you today. Again, 
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Tom Foley, I'm with the National Disability 

Institute. 

We're the first and only national 

disability organization that works exclusively on 

financial and economic inclusion for folks with 

disabilities. I want to highlight three data-points 

to then highlight three things that we're 

specifically working on. 

So, for folks with disabilities, and this 

is based on 2019 FDIC data, folks with disabilities 

are three times less likely to be banked than the 

rest of the population, 4.5 percent to about 16.2 

percent.

Similar trends hold true for access to 

credit. Folks with disabilities are about 1.7 times 

less likely to get the credit that they're interested 

in receiving than the rest of the general population.

But you know the number that really tends 

to get people's attention is one around net worth. 

And for an average household in United States, 2019 

data, it's around $84,000. For people with 
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disabilities, it's about $14,400. 

But if you look at households that are 

black and disabled, that net worth comes out to $1282. 

Again $1282. So, this intersection at race and 

disability is really where we're seeing some outcomes 

that simply need to change.

I mention these data-points for three 

reasons. One is we have access to this data and 

that's the first thing I want to highlight. We have 

access to this data because FDIC asks the disability 

question. 

And you know Financial Health Network 

also asks the disability question in their Pulse 

data. And so this is critically important to doing 

this work is having access and asking the disability 

question. 

Whether that’s Section 1071 of Dodd Frank 

or the Equal Private Opportunity Act, we need to get 

data on people with disabilities. 

And I encourage anyone when talking about 

data to really think about, oh gosh, are we even 
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collecting data on those 41 million Americans with 

these kind of economic outcomes?

The second thing I wanted to talk about

was CRA, community reinvestment. I'm really excited 

about this afternoon's presentation because for the 

first time ever with the proposal, people with 

disabilities are actually talked about as a group to 

be served. 

But I guess the question that we've been 

asking and the question I ask everyone here, $1282, 

is it enough that people with disabilities are being 

identified as a group that count towards CRA credit? 

Perhaps we could do something to more 

deeply invest in these communities that are having 

these kinds of economic outcomes. And the last piece 

I wanted to talk about was accessibility. 

We talk about accessibility to bank 

accounts but for me that means something different 

and I've had the great opportunity to work with a 

number of you for a while but if I were there in 

person you would notice my Golden Retriever guide 
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dog. 

She's always the most popular one. I'm 

totally blind so when I talk about accessibility, I 

talk about the digital accessibility of the bank's 

website or digital accessibility of an app.

And we know from survey data that 60 to 

70 percent of these products are not always 

accessible to people with disabilities. Digital 

accessibility is not mentioned in the refresh on CRA.

So, when we're talking about including 

disability and including, particularly people at the 

intersection of race, ethnicity, and disability, you 

know digital accessibility is something that really 

needs to be front of mind if we want to reach this 

community.

And I think we do. I was reminded in 

talking with some friends that I knew back in college, 

which was a while ago, and a number of them are doing 

quite well. They talk about putting their kids 

through college with their stock options.

And these are other people like me, 
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they're blind, they're quadriplegics, they're people 

who have built a financial future for themselves and 

their family because inclusion works. 

And that has made all the difference for 

them, so there's still a huge discrepancy in the 

disability community. But with all you guys and on 

the Board, I'm really looking forward to taking steps 

to close those gaps.

I really appreciate the opportunity to be 

here today and Naomi, I will hand it off to you.

MEMBER CAMPER: Great, thank you so much, 

Tom, and it's actually fitting that I follow Tom 

because what I want to focus on today and thank you, 

it's really nice to see everyone, I love the camera 

on setting so it's at least a little bit interactive. 

The work that Tom and I did together when 

each of us was at our former employer has now grown 

and expanded and a real shout-out to Tom and MDI for 

the work thank you been doing with ABA and our member 

banks to help really guide them and train them to be 

able to make both their branches and their digital 
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offerings fully accessible to all customers. 

And the theme of this whole Committee is 

inclusion so I just want to give a quick update on a 

few things that rise to the top for what ABA is doing 

but also that in order to move those initiatives 

forward, we really depend on collaboration and this 

is the right group to tell you where I think we can 

make a few steps forward.

So, first, of course you know I'm going 

to start with BankOn, I always do. And Jonathan 

previewed some of the progress. 

What I think he didn't spell out is since 

we started working together at ABA and CFE on 

encouraging all banks to offer BankOn accounts, it's 

been -- Jonathan check my math -- but more than a 500 

percent increase in the number of certified accounts 

with more coming along.

And what's especially exciting is that it 

really ranges across banks of all sizes. 

It's the biggest to the smallest and 

we've actually at ABA developed this incredibly cool 
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dashboard that shows you a visualization on a time 

series by state and by county of where there is now 

physical branch access to a bank offering BankOn 

accounts. 

So, that visualization, that took a long 

time to populate, we're keeping it updated. I really

would love for you all to go visit it, you can just 

Google ABA BankOn and it takes you really right to 

that website. 

That's been a really important tool as 

we've tried to encourage additional adoption of 

BankOn accounts with our banks. Part of it is 

inspiring banks to get involved. 

There may be a little FOMO involved and 

whatever it is that motivates our members to offer a 

BankOn certified account, we're all for it. 

We also are really focused on not just 

having banks offer those accounts, they need market 

them and they need to really invite customers in. 

So, to that end, we are very close to 

launching a training program for frontline bank staff 
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whose banks offer these accounts, because we really 

want them to understand and have skin in the game on

why these accounts are exciting, who they're meant 

for, who might be inspired by them. 

And really how it lifts up some of the 

insights from the FDIC's survey and trains staff how 

to talk about these accounts in ways that resonates. 

So, thank you to CFE and FDIC for their partnership 

there.

We are really focused in two follow-on 

areas, one is encouraging broader marketing of these 

accounts with the BankOn certification label. And I 

would say that an echo chamber around what a BankOn 

account is would be really helpful. 

So, we know that one of the reasons 

people are unbanked is there's a test gap with banks. 

So, to the extent there is reinforcement 

from whether it's the public sector or the nonprofit 

sector reaffirming that if there's a BankOn seal, 

that is an account you can feel confident you're going 

to get the right features and in a safe way. 
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That's really great validation that 

creates a virtuous cycle. The other thing we're 

really asking our banks to consider doing is putting 

their data into the St. Louis bond hub so that we get 

better data about how these accounts are performing. 

So, that's a real priority for us. The 

thing that's been the most impactful for getting 

banks to adopt BankOn certified accounts is when we 

collaborate on information sharing. So, I know we 

have worked with the FDIC, the OCC, and the Federal 

Reserve Community Affairs Office, we've done webinars 

with our state alliance members and those agencies.

We have pretty much unlimited capacity to 

do those. We would love to do a 50-state physical or 

virtual tour with anybody. The more we talk about 

this in a collaborative setting, the more banks are 

going to adopt BankOn certified accounts.

So, that's my ask for you. Two other 

quick things that we've been up to at ABA, you can't 

tell where I'm looking but I'm looking at Kenneth 

Kelly. We have started up a special MDI Advisory 
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Council that's a peer-to-peer firm within the ABA.

But what's important to us is that we're 

doing it in close collaboration with the National 

Bankers Association. 

They are essentially jointly staffing 

this for us to make sure that we create these 

connections not just within the MDI community but 

then longer term to make sure that our other members 

who want to collaborate with MDIs have that 

opportunity and we're happy to help facilitate that. 

Finally, a huge and growing problem with 

fraud. We are relaunching our Banks Never Ask That 

campaign. 

This is another one where collaboration 

is going to be the most effective. We use humor to 

talk about banks will never call you up and ask for 

-- of course, what we really mean is your bank account 

number and your Social Security number, but we inject 

humor and it's a very catchy campaign.

We are hoping to have widespread 

participation in this but it's a really troubling 
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issue with all the mobile phone spoofing et cetera. 

So, for another day. Liz is getting panicked because 

we're almost out of time.

But with that, thank you and I will turn 

it over to my friend Mike Calhoun. 

MEMBER CALHOUN: Thank you, Naomi, and 

I'll try and pick up the pace and continue that trend 

and build on the points that the wonderful Members of 

this Commission have made. 

It truly is quite an honor and 

opportunity to serve at this time. We are hopefully 

coming through the worst of the COVID-19 pandemic 

although the future is certainly hard to predict. 

And we are blessed to be led by the 

leadership of the FDIC which includes such experience 

but also people willing to take new approaches. 

The responses from the Government 

certainly lessen the pain of COVID-19 and in fact, I 

noted that household wealth this year has hit a new 

record of over $140 billion. 

 But it's no surprise to the people here 
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that wealth is skewed very heavily with the top 1 

percent holding onto 30 percent of the total wealth 

in the country. 

The top 10 percent have 70 percent of the 

wealth and the bottom half of the population having 

just over 2.5 percent of the wealth. And when you 

add the racial divide and other considerations, the 

disparities become even greater. 

We are right now in a particularly 

challenging time. 

We do, as many of you know, at the Center 

for Responsible Lending and self-help credit unions, 

a lot of our focus is on housing work. We are 

experiencing the greatest housing affordability shock 

that I've seen in 40 years of work. 

Over the last 18 months, between house 

appreciation north to 30 percent and the near 

doubling of mortgage interest rates, you've seen a 

house payment for the typical home buyer, a 

prospective buyer, more than double in an 18-month 

period. 
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I think one of the things that this 

COVID-19 period and coming on the heels of the Great 

Recession it made clear are pretty durable features 

in our landscape. 

First, it is a time of volatility for 

households, particularly lower wealth households. And 

Jennifer at Financial Health Network has done great 

job of documenting that. 

Those households are more vulnerable than 

they were in the COVID-19 crisis, than they were in 

the Great Recession, and they will be going forward. 

And second is we have this vast wealth 

disparity with many of the families that we are trying 

to help having virtually no financial assets.

One important factor about the wealth 

figures is that they typically include, the typical 

ones that are cited include, durable goods, 

principally personal property, and the biggest one 

being cars. 

For example, if you take those out, the 

racial wealth gap goes from 8 to 1 for black 
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households and 5 to 1 for Latino households to 20 to 

1 for Latino versus white households.

And over 40 to 1 for medium wealth for 

black and white households. 

I think the challenge before us how do we 

build a financial system that serves those 

households, recognizing that volatility, that 

disparity of wealth in too many of our products or 

what I would call Ozzie and Harriet products that are 

designed for 1950s when there was stable income, 

stable jobs, and a steadily growing economy. 

So, one, this is going to require new 

approaches, new ideas, which many are already 

outlining here. 

One we're looking at in the mortgage area 

is, as others have, building on research that shows 

that it's disruptions of income shocks and expense 

shocks that trigger foreclosures, a program we're 

launching self-help is setting up reserve funds with 

higher LTB. 

100 percent LTB loans, we provide a grant 
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of $2500 for reserve funds with required 

contributions of $25 a month, because we also with 

the failure of passage and the Build Back Better Act, 

there's the scarcity of dollars to meet these 

increased needs. 

And so we're going to have to try new 

approaches. And lastly, we need to fix the products 

instead of serving and addressing and ameliorating 

this volatility and wealth disparity, instead exploit 

it. 

And I will finish with comments that 

others have raised and in particular, overdrafts, 

which very much took what once was a courtesy program 

and turned it into a cash cow where most of the money 

is funded 80 percent of it by statistics, by those 

living on bank account balances that average about 

$350 and who help subsidize accounts for others. 

We welcome the changes that we have seen 

but to help those who are currently being battered by 

overdrafts, the frequent overdrafters, there have to 

be very substantial limits on the fees and the number 
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of fees that can be charged each year. 

And unfortunately, many, in fact the 

majority of the publicized changes don't do that. The 

one real bright post has been the widespread 

elimination of NSF fees which particularly hit those 

households. 

But too many of these other programs, 

despite the value changes, still charge unlimited 

numbers of high overdraft fees that will continue to 

follow in these households. 

And they're winning quite frankly the PR 

campaign, if you look at the ads and the marketing, 

that focus on those more nimble around-the-edges 

programs. 

This is, and I'll finish with, a call, 

this will only get fixed, this is often the case, 

with coordinated regulatory action that sets basic 

protections to keep people from being subjected to 

these abusive practices and we hope that this group 

of regulators and the institutions they represent 

will continue their leadership in achieving those 
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reforms.

So, with that I will pass it onto Steve, 

who we all have the pleasure of knowing.

MEMBER ANTONAKES: Great, thank you, 

Mike. Good afternoon, and certainly, I'm honored to 

be here as well. I'm cognizant that I have 90 seconds 

until the end of the break so I will try to be as 

quick as I can be.

I want to especially thank Chairman 

Gruenberg, Comptroller Hsu, it is a special treat for 

me also to be here with Director Chopra and Deputy 

Director Martinez, both of whom I had the privilege 

of working alongside for several years at CFPB.

Also, I'd just like to thank the 

professional staff of the FDIC that are in 

attendance, again many of whom I had the privilege of 

working with on interagency and FFIEC efforts.

So, let me just give a quick primer on 

Eastern Bank, which is a name that probably isn't 

familiar for most of you, speak briefly to some of 

the economic inclusion challenges that we're seeing 
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in our market and then just discuss a couple of our 

current initiatives. 

And again, I will try to be as brief as 

possible. Eastern is $24 billion commercial bank, 

primarily servicing Eastern Massachusetts and 

Southern New Hampshire. 

We're based in Boston we trace our roots 

to the 1818 chartering of the institution for savings 

in the town of Salem, Massachusetts. 

And couple of differentiators in my mind 

for Eastern, nearly one in three of our offices are 

located in low and moderate income census tracks. 

We have an active social justice platform 

and we use our voice to advocate for LGBTQ+ rights, 

women's rights, immigrant rights, and racial equity. 

We also have an outsized foundation with 

nearly $300 million in assets and its primary mission 

is economic inclusion and mobility, with a particular 

focus on advancing equity in the small business 

ecosystem, securing safe and affordable housing, 

enriching early childhood development as well as 
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promoting workforce development.

Now, in terms of what we're seeing for 

economic inclusion, let me just pick off what Mike 

was speaking to earlier on in his comments. 

Certainly, the dramatic run-up in housing values and 

lack of affordable housing stock is really front and 

center.

A recent study concluded that buying a 

home in Boston specifically requires an annual salary 

of $181,000 or twice the medium. 

Secondarily, I would say, also noteworthy, the 

historic wealth gap that exists between white, brown, 

and black families as chronicled by the Federal 

Reserve Bank of Boston 2015 Color of Money Study. 

And that's a situation, unfortunately, 

which has probably only grown worse through the years 

of the pandemic. 

And then just the current economic issues 

that we're all grappling as well, inflation, 

increased cost of living, gas prices for those that 

are still commuting to the office and don't have the 
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luxury to work remotely.

And at least in the case of 

Massachusetts, the public transportation system and 

infrastructure that is not nearly as robust as it was 

before the pandemic. 

So, transitioning into a couple of things 

that we're focusing on at the bank, we will be shortly 

launching a special-purpose credit program with more 

flexible underwriting criteria for loans to women and 

minority-owned small businesses.

Its primary objective is really to 

counteract the systemic inequities that women and 

minority businesses, small businesses, face. 

The program will feature loans from 

$10,000 to $250,000 with reduced minimum credit 

scores and relaxed cash flow requirements. 

Moreover, we're actually offering the 

program with no minimum credit scores for loans of up 

to $100,000 if the borrower works with and is vetted 

by one of our nonprofit community partner 

organizations. 
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So, it's something we're very excited 

about and plan on launching later this summer. We 

have a commitment to at least landing $5 million in 

this space this year and then we'll continue to assess 

the viability of that program thereafter.

There's been a great deal of discussion 

already about overdraft, both trends in the market, 

changes that institutions are making. 

We are also implementing a number of 

changes in the overdraft space like many banks, 

although perhaps not as many banks of our size. 

Specifically, effective July 1st, we will 

eliminate all NSF fees. We'll provide an enhanced 

safety net by not charging an overdraft fee if the 

end of day available balance is $50 or less. 

Additionally, we do not charge an 

overdraft fee for any transaction of $5 or less 

regardless of the end-of-day balance. We're capping 

overdraft fees at one per day and we previously 

eliminated linked account fees and any annual fee or 

cash advance fee tied to our cash reserve products.
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I'd say we're not done at that point, 

however, as we are now researching the viability of 

a low-cost short-term liquidity program as an 

additional alternative to overdraft for our customers 

as well.

So, with that, Liz, let me turn it back 

to you. 

MS. ORTIZ: Thanks, Steve, and thank you 

Members for making my job really very easy because 

all I need to say right now is that was a great 

roundtable. I'm talking to you from the dark. 

Let me move everybody into a short break 

by paraphrasing new Member Tom Foley, inclusion 

works. Indeed, it has made all the difference. All 

right, I'll see everybody back here at 2:40 p.m. and 

the lights will be back on. 

Thank you. 

(Whereupon, the above-entitled matter 

went off the record at 2:34 p.m. and 

resumed at 2:40 p.m.) 

MS. ORTIZ: Welcome back, everyone, it's 
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now my pleasure to introduce my colleague, Luke 

Brown, Associate Director in FDIC's Division of 

Depositor and Consumer Protection. 

Luke? 

MR. BROWN: Hello, everybody, thank you, 

Liz. Hopefully you can hear me okay. Good afternoon, 

it's a pleasure to be here with a great panel. 

Our panel's discussion will focus on 

appraisal bias and efforts to address this really 

important issue. 

Over the last year, a spotlight has been 

shined on the appraisal industry and its practices. 

Slide 2, please? There we go. Right there is 

perfect, thank you. 

With Maureen's permission, who is the 

author of this report that I'm referencing here, I'm 

providing a quote. So, I saw this quote in the 

National Fair Housing Alliance report on appraisal 

bias and I think it says it all. Appraisers have the 

power to effect whether a consumer can buy a home 

instead of rent, access credit with reasonable terms 
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or build wealth for their family and generations to 

come. 

Obviously, that's a lot of power and 

that's a great impact on every day people's lives. 

You might have heard about a situation that occurred 

a few years ago in Marin City, California. 

In 2020 a black couple was seeking to 

refinance their home. The initial appraisal value of 

that home was $995,000. 

Suspecting that the valuation of their 

home was unjustifiably low, they ordered a new 

appraisal from a different company, cleared all 

evidence of their race from their home. 

And then they asked their white friend to 

pose as the homeowner. The second appraised value of 

their home came in at $1.48 million. So, this is 

just one illustration that bias in the appraisal 

process continues today.

And this is an important issue that needs 

to be addressed. So, our panel discussion will focus 

on issues regarding bias in the home appraisals 
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including the history, background, trends and recent 

events and analysis. 

These issues will be explored from a 

consumer and industry and policy perspective. Each 

of our panelists will start by providing some opening 

remarks and then once they're concluded we'll 

transition over to ComE-IN Members. 

To the extent that you might have 

questions, the panelists are happy to answer them. 

At the beginning of the meeting, Acting 

Chairman Gruenberg introduced our panelists but in 

case some participants weren't on the call at 1:00 

p.m., I'll just do another quick introduction.

Our first speaker will be Maureen Yap. 

Maureen is currently the Senior Counsel at the 

National Fair Housing Alliance. Kenon Chen is our 

next speaker. Kenon is Executive Vice President of 

Corporate Strategy at Clear Capital.

And for the purpose of this panel, Kenon 

is representing the Real Estate Valuation Advocacy 

Association. 
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Our final presenter is Melody Taylor. 

Melody serves as Executive Director of the 

interagency taskforce on PAVE.

The PAVE action plan, as the Chairman 

described, is a big deal. The interagency PAVE 

taskforce is chaired by HUD Secretary Fudge and 

Domestic Policy Advisor Ambassador Susan Rice.

And through the PAVE action plan, the 13 

Member federal agencies, including the FDIC by the 

way, commits to taking some concrete steps including 

specific regulatory supervisory and examination 

actions to substantially reduce the racial and ethnic 

bias in residential property valuation. 

So, we believe this report will move 

things forward and there's now a lot of important 

focus and attention on this issue across the federal 

agencies and other stakeholders as well.

So, with that let's get started, Maureen, 

it's all yours.

MS. YAP: Thanks to the panel. Thank you 

so much for the opportunity today. As Luke mentioned, 
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my name is Maureen Yap and I am a Senior Counsel at 

the National Fair Housing Alliance.

Next slide, please.

So, to understand where we are today, 

it's helpful to understand the history. In fact, 

many of our laws were purposely designed to provide 

opportunities to whites and to simultaneously deny 

opportunities to people of color.

Next slide, please. 

Segregation and discrimination were in 

place from the beginning of America's housing market, 

but really became codified in the 1930s under the New 

Deal. At that time, the Homeowners Loan Corporation, 

or HOLC, was established.

The HOLC used feedback from real estate 

professionals including appraisers to develop risk 

categories. They also developed maps that were 

explicitly based on the unfounded Association between 

race and risk. 

As you can see in this HOLC map of 

Baltimore, the Government shaded areas in red and 
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coded them as hazardous if there were any black 

households in the area. This led to the term 

redlining which is used today.

Later, the Federal Housing 

Administration, or FHA, adopted a system for 

underwriting mortgages, which meant that the FHA 

provided mortgages on the basis of race, not on 

whether the individual could afford a mortgage.

So, early on, the Federal Government 

codified the unfounded association between race and 

risk and the idea that the highest value should be 

reserved for white, homogeneous areas.

Next slide, please. 

This discrimination did not stop with the 

maps but was further bolstered through the explicit 

race-based policy manuals. 

For example, the 1938 FHA underwriting 

manual stated areas surrounding a location are 

investigated to determine whether incompatible racial 

and social groups are present for the purpose of 

making a prediction regarding the probability of the 
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locations being invaded by such groups. 

Next slide, please. 

To address these unfair practices, 

advocates and stakeholders work tirelessly to pass 

the Fair Housing Act in 1968 and the Equal Credit 

Opportunity Act in 1974. 

These laws promote fair access to credit 

and fair housing, including fair appraisals. 

Next slide, please. 

But we all know the passage of a law does 

not magically change existing policies practices or 

attitudes.

So, as late as the 1970s, the course 

material for the American Institute of real estate 

appraisers included explicitly race-based 

evaluations such as a general rule, homogeneity of 

the population contributes to stability of real 

estate values. 

Information on the percentage of Nativeborn whites, foreign whites and non-white population 

is important and the changes in this composition have 
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a significance. 

So, you can see the race-based policies 

continued among real estate professionals even after 

passage of civil rights laws, making it harder for 

people of color to buy homes and build wealth.

In fact, the appraisal manual kept this 

language until it was sued by the Department of 

Justice and the case was settled in 1977. 

Next slide, please. 

And now we'll take a look at how 

appraisal bias can manifest in the present time, even 

without explicitly race-based policies. 

We know from experience in mortgage 

pricing, mortgage underwriting and insurance, that 

broad discretion is a key risk factor in 

discrimination. 

Here's a copy of the current uniform 

residential appraisal report, which uses a method of 

valuation called the sales comparison approach. 

Fannie Mae, Freddie Mac, and others 

require appraisers to use this approach in their home 
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valuations. 

As you can see, the form states that race 

and racial composition of the neighborhood are not 

appraisal factors, however, the form itself provides 

the appraiser with broad discretion. 

For example, the form provides appraisers 

with the discretion to determine the neighborhood 

boundaries and neighborhood descriptions and whether 

a market is declining. 

Other parts of this forum also provide 

the appraiser with broad discretion to decide which 

comparable sales to use and which value adjustments 

to make. 

So, let's see how this plays out for 

appraisals. 

Next slide, please. 

First, we turn to the recent research by 

the Federal Housing Finance Agency. 

They reviewed the numerous appraisal 

reports contained in the Fannie Mae Freddie Mac 

uniform appraisal data set and found that thousands 
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of appraisal reports still contain language based on 

race, ethnicity, and religion. A few examples 

include black race population above state average, 

store fronts supplying Jewish households, 

predominantly Hispanic, more Asian influence of late, 

and of course, homogeneous neighborhood with good 

schools. 

This shows that the issue is not just a 

one-off but pervasive. 

The issue is if the valuation is not 

based on a prohibited basis like race, ethnicity, or 

religion, then why would the appraiser feel the need 

to put this language in the freeform text portion of 

the report?

Next slide, please. 

Next, let's take a look at refinancings 

and Luke alluded to this particular issue here. 

This issue has been prominently featured 

in the news lately with reports of households of color 

having to whitewash their homes to get a fair 

valuation. 
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Here, whitewashing means that the 

homeowner removed all evidence that they are a 

homeowner of color by removing family photos, holiday 

cards, art and books, and asking a white friend to 

pose as the homeowner.

And after this whitewashing, the 

appraised value is much higher. In one case, even 

half a million dollars higher. And of course, this 

change in value represents wealth, equity, and 

opportunity for this family. 

It also represents a gut-wrenching 

decision for families of color who have to decide 

whether to erase all evidence of their racial 

identity in case that will impact the value of the 

home.

Next slide, please. 

So some might say well that's troubling 

but that's just a few bad apples. So, we can turn to 

Fannie Mae's recent research on millions of 

refinancing and appraisal reports in its database. 

Fannie Mae found the greatest over 
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valuations were for white homeowners in majority 

black neighborhoods. 

Fannie Mae also determined, quote, for 

white borrowers in majority black neighborhoods, the 

leading separately identifiable reason category for 

the over valuation is comparable location. 

This indicates that the appraisal relied 

on comparable sales from outside of the subject 

property's immediate area even though potentially 

more appropriate comparable properties were available 

closer to the subject property. 

So, another way to say this is when faced 

with a white homeowner in a majority black 

neighborhood, the appraiser used their discretion to 

go beyond the black neighborhood to find another 

neighborhood that reflected a different higher value 

for the white homeowner. 

So, in other words, these findings show 

systemic evidence of the impact of the whitewashing 

effect we have seen an individual incidents. 

Next slide, please. 
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Alright, let’s see if the story is any 

different for purchases. Freddie Mac recently 

analyzed over 12 million appraisal reports in this 

database. Unfortunately, the story remains the same. 

Freddie Mac found that appraisers were 

much more likely to find the appraised value fell 

below the contract price in black and Latino census 

tracks. 

Based on our experience, this means a 

less valuable property for the buyer, plus a 

reduction in wealth as the buyer has to come up with 

more cash to close. Or in some cases, the buyer just 

loses out on the property. 

So, the appraisal disparities for 

purchases also appear to be systemic. 

Next slide, please. 

So what does this mean overall? 

Dr. Andre Perry and his colleagues at the 

Brookings Institution found that consistent 

undervaluation of similar homes result in a stunning 

$156 billion in cumulative losses for families in 
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majority black neighborhoods and for the country as 

a whole, putting everything together given the 

centuries of discriminatory policies by government as 

well as private actors. 

Today the home ownership gap between 

black and white individuals is larger than it was 

before passage of the Fair Housing Act. Latinos and 

other communities of color also lag behind the white 

home ownership rate.

Given that home ownership is the 

cornerstone of building wealth in the United States, 

it is not surprising that the wealth gap between 

whites and communities of color remains large and 

persistent. 

Next slide, please. 

Against this backdrop, the Appraisal 

Subcommittee commissioned a report to identify any 

instances of racial or ethnic bias in appraisal 

standards. 

Since that time, NOF has also built out 

some recommendations that go beyond the scope of the 
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report. 

Next slide, please. 

So I'm going to very quickly run through 

these recommendations.

Overall, we advocate for an appraisal 

process that is fair, transparent, and data-driven. 

So, first, governance. 

At this time, the appraisal process is 

governed by rules set forth by the appraisal 

foundation, a private nonprofit entity that is not 

subject to the guardrails for federal rulemaking. 

We recommend transferring the rulemaking 

to the Appraisal Subcommittee, which is a federal 

agency. Next, the appraisal profession. 

Relatedly, the Appraisal Foundation's 

criteria for entry into the appraisal profession are 

unreasonably high, leading to a profession that is 97 

percent white and 70 percent male. 

The Appraisal Foundation should review 

these professional criteria for disparate impact and 

only retain those criteria that have a solid business 
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justification. 

Fair housing training, also related, the 

Appraisal Foundation's criteria do not contain robust 

or accurate requirements for fair housing training. 

The Appraisal Foundation should immediately revise 

the inaccurate training and requirements. 

Next, the appraisal standards. Given the 

high fair housing risk in discretion, the Appraisal 

Foundation, GSEs, and other federal agencies should 

revise the guidance to limit the risk of discretion. 

Data, next, the GSEs require lenders and 

appraisers to submit appraisal data to them which has 

resulted in a comprehensive database of millions of 

appraisal reports. 

To ensure robust compliance and 

enforcement, the FHFA and other federal regulators 

should share the appraisal data among the regulators 

and with the public. 

Lastly, accountability is a highly 

complex issue but overall, the goal should be to 

provide consumers with access to fair remedies from 
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discriminatory appraisals. 

Among other things, the federal 

regulators and enforcement agencies should issue exam 

and investigative procedures to identify potentially 

discriminatory appraisal practices.

Next slide, please. 

We acknowledge that it will take 

coordinated and concerted efforts to reverse the 

centuries of discrimination. 

But we can accomplish great things when 

we work together, so we're hoping that through this 

discussion, we can all recommit to work together to 

promote racial equity and fair appraisals. 

Thank you to the FDIC and to this panel 

and I'll turn it back over to you, Luke. 

MR. BROWN: Thank you, Maureen. 

Extremely helpful, substantive presentations that I'm 

sure is food for thought as we move towards a 

conversation at the end of the opening remarks.

Kenon, the mic is with you. 

MR. CHEN: Thank you very much, thank you 
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to the FDIC for inviting me to join the panel, thank 

you to my fellow panel members. Maureen did an 

amazing job I think talking about the history of 

policy and the impacts.

And so I'm going to really focus on 

looking at where we are now and where some of the 

progress is moving forward. 

You can go to the next slide. 

My name is Kenon Chen, I am here 

representing the Real Estate Valuation Advocacy 

Association.

And to share the perspective of appraisal 

management companies and residential property 

valuation providers. 

As background, appraisal management 

companies are third-party service providers which are 

engaged by bank and non-bank lenders to manage 

appraiser and valuation professional panels to 

complete residential assignments and compliance with 

state law and federal appraisal independent of its 

requirements.
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Like appraisers, AMCs, appraisal 

management companies, are regulated in all 50 states 

in the District of Columbia. And federal oversight 

comes from the Appraisal Subcommittee.

The support for Fair Housing Compliance 

and Diversity is very clear from a REVAA standpoint. 

REVAA unequivocally supports fair housing compliance 

and supports a vibrant and diverse appraiser 

industry.

We have and attempt to remain an active 

part of the collective solution as the 

recommendations of the PAVE taskforce final report 

are further discussed and new policy revisions 

implemented. 

From our perspective, the spotlight, Luke 

mentioned it earlier, the spotlight has been cast on 

the appraisal evaluations industry by both the 

creation of the PAVE taskforce and its groundbreaking 

work as well as the media coverage has actually 

brought us a historic moment for the appraisal and 

valuations industry. 
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And it joins two other pivotal moments 

which have really shaped and reshaped the home 

valuation process including the passage of the 

Financial Institutions Reform, Recovery and 

Enforcement Act of 1989, FIRREA, as well as the DoddFrank Act in 2010, which came on the heels of the 

housing financial crisis.

It is a once-in-a-generation opportunity 

that 13 agencies came together to agree on a set of 

recommendations, which I know that Melody will cover 

here in a bit. 

So, plain and simple, it is imperative 

that we seize this opportunity afforded by this 

unprecedented cross industry and cross-government 

collaboration to enact real and meaningful changes. 

I want to move forward to the next slide. 

I know we've talked a lot about the 

current demographics and racial makeup of the 

appraisal workforce but I did want to also address 

the aging nature of the workforce as well as the 

capacity within today's appraisal workforce. 
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I'm showing a slide here from Freddie 

Mac, both Freddie Mac and Fannie May have tracked the 

number of licensed appraisers, unique appraisers, 

working on appraisals being submitted to the uniform 

collateral data portal.

And so we can see data from 2013 to now. 

What you see on here is the volume of appraisals being 

submitted for both purchase and refinance volume and 

that gives you the green and blue bar charts there.

And then the yellow line that's going 

directly across is the number of unique appraiser 

licenses tied to that work being done. 

And it becomes pretty clear right away 

that the volume of appraisals needed for the industry 

over time has increased greatly from 2013 until now, 

but the number of active appraisers has stayed flat. 

And actually, when you look at the data 

from the Appraisal Subcommittee, we show actually a 

3 percent decline in the number of active licenses 

doing appraisal work. 

I'm going to the next slide. 
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What that has resulted in is that less 

and less young people and new diverse entrants to the 

appraisal profession have been joining the workforce. 

In fact, the median age is 52 for 

appraisers, and then this stat has been mentioned 

multiple times already that appraisers are 97 percent 

white and 70 percent male. And what we see is that 

there are multiple barriers to entry into the 

appraisal profession.

Not only is the requirements high in 

terms of from an educational standpoint, the need to 

complete 1500 to 2500 hours of experience in order to 

get a license, but also the current supervisory 

model, which requires that those experience hours are 

done with a supervisor. 

And supervisory appraisers are often 

hesitant to take on trainees. One, there's an 

economic burden that requires their time and effort, 

and often, not getting paid for that additional time. 

But also, there's a max of the number of 

trainees that a supervisor can take on, only three. 
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And then once a trainee is trained, 

because an appraiser often works within a local 

market, they're essentially training someone to work 

in the exact same area that they work in for their 

income. 

And so they're training their competitor. 

And so it's very difficult for new entrants into the 

profession to get a supervisor to take them on unless, 

of course, they have a close relationship with them, 

which is why often family members are trained by 

supervisory appraisers.

Next slide, please. 

From a REVAA standpoint, the 

recommendations are to remove some of those barriers 

to entry and to use that as an opportunity to both 

modernize the training process as well as the 

experience requirements.

There's been programs already put forth 

that are being adopted at a state level like the 

practical application of real estate appraisal 

program, which utilizes virtual training and 
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technology to help train future appraisers on a 

variety of different markets without needing to rely 

on all their experience hours coming from 

supervisors. 

Next slide, please. 

I also want to go through some of the 

lessons that really have been learned and then 

accelerated throughout the COVID-19 pandemic. 

Appraisal modernization efforts are underway right 

now. 

About four years ago, we notice that 

there was an inability for the appraiser capacity to 

handle spikes within loan volume, particularly within 

refinance volume driven by rate changes. And a number 

of different organizations started experimenting with 

ideas to solve those capacity issues. 

Those lessons learned were also 

accelerated through COVID-19 because of the need for 

appraisers to gain access to data on properties 

without actually entering the properties themselves 

to promote social distancing.
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And so appraisal flexibilities and new 

valuation tools were enacted in partnership with 

Fannie Mae and Freddie Mac to provide new ways for 

data to be collected and gathered at the property so 

that the property data was being brought to 

appraisers at their desk rather than appraisers 

needing to visit the home and collect data 

themselves. 

Both GSEs have enacted hybrid appraisal 

programs and some 280,000 hybrid appraisals have been 

completed in tests and learns over the past few years.

And again, what this involves is a nonappraiser visiting the home, collecting data, 

utilizing a mobile device, and then that data being 

presented in a transparent way back to the appraiser 

at their desk. 

The quality has been found through these 

280,000 appraisals to be at least the same, if not 

better, than traditional appraisals. And in fact, 

Freddie Mac is moving forward with launching a nonappraiser property data report on July 17th. 
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Again, powered by mobile technology to 

gather the data in a more standardized and 

transparent way. 

Next slide, please. 

What I'm showing here is actually Fannie 

Mae's vision for a risk-based spectrum of appraisals 

moving forward, moving from on the left appraisal 

waivers, utilizing technology to know whether a new 

appraisal was needed based on previous data and 

understanding of the property to inspection-based 

appraisal waivers where data collection happens at 

the property, gathering data, to desktop appraisals 

where data already exists but an appraiser is looking 

at it from their desk and doing analysis. 

Hybrid appraisals, where a non-appraiser 

is collecting the data and again bringing that data 

back to the appraiser. And then in certain cases 

sending out an appraiser to the property. 

And in all of these, what we see is the 

potential to create more independence and less risk 

of an unconscious bias by removing the need for an 
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appraiser to know who the occupants of the property 

are.

Next slide, please. 

Through adding additional workforces, 

additional capacity is increased to handle some of 

those spikes in volume that we showed in the previous 

slide. 

Property digits of aged technology is 

required with appraiser modernization, which again 

brings additional transparency and standardization to 

deal with some of the subjectivity that Maureen 

mentioned in her presentation.

And then I already spoke about removing 

potential unconscious bias risk by again creating 

additional separation between the occupants of the 

home and the person doing the actual analysis in 

value. 

Next slide. 

We have seen again unprecedented 

collaboration with the PAVE taskforce and agreement 

on the roadmap to reduce inequity. 
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Part of that action plan includes 

information on modernization efforts and agreement on 

the need to modernize the appraisal process which 

really has not changed much in the past few decades.

There's also an agreement on increasing 

appraiser diversity. And that removes blind spots. 

And appraisal management companies, which we 

represent, play a key role in hiring and training new 

appraisers. 

So, they're a really good vehicle for 

accelerating appraiser diversity within the industry. 

Fannie Mae and Freddie Mac have also both 

released equitable housing plans which are really 

worth the read, and both of them contain specific 

appraisal changes that include modernization steps as 

a key part of accelerating equitable valuation in the 

industry. 

Also, REVAA has partnered with both GSEs 

on the appraiser diversity initiative which is an 

initiative to recruit new diverse talent into the 

industry, working with the National Urban League and 
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others.

Next slide, please. 

Where do we go next? 

Obviously, we're at a pivotal time where 

we have some pretty amazing roadmaps that have been 

set up that have the ability to provide options for 

change. 

But they now require ongoing crossindustry collaboration, bringing all stakeholders to 

the table to ensure that the execution of those plans 

has the intended result. 

We also need to continue to work on the 

adoption of automated valuation model quality control 

standards so that automated valuations also have the 

appropriate testing and appropriate quality control 

when it comes to reducing any disparate impact. 

Constructive dialog with Congress, 

federal regulators and industry stakeholders is a 

must so that no unintended consequences arise through 

the adoption of new policies and regulations. 

And then we agree with NOFA on more data 
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collection and data sharing to ensure the scope and 

impact of issues are understood for effective 

solutions.

I just want to say thank you very much 

for the time and I'm certainly happy to engage in the 

discussion once we get to questions. Back to you, 

Luke, thank you. 

MR. BROWN: Kenon, thank you for the 

thoughtful presentation, a lot of information in what 

you just walked us through, including on the dynamics 

around the workforce and the aging and also obviously 

the issue of the supervisory model where there are a 

number of challenges embedded in that model to bring 

in new people, which obviously is a problem that needs 

to be addressed. 

But thank you for walking us through that 

and with that, I'll pass the baton to Melody, who 

will talk about her PAVE work. Thank you, Melody.

MS. TAYLOR: Awesome, thank you, and 

thank you, Maureen and Kenon, for your great 

presentations. And in both of what you presented 
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some validation to the work that the PAVE taskforce 

has done and will continue to do.

So, I also want to thank you, Luke, and 

Members of the Committee for the invitation to share 

information and updates regarding property appraisal 

and valuation equity, which we affectionately call 

PAVE. 

And so for the next few minutes, I'd like 

to walk through elements of the action plan on a high 

level and provide an update on where we are so far 

and where we'd like to go. 

Next slide. 

So, as you likely know, on June 1st, the 

centennial of the Tulsa Race Massacre, President 

Biden announced the creation of the taskforce, giving 

us 180 days to develop a transformative set of actions 

to root out racial and ethnic bias in home valuations.

The taskforce, as mentioned earlier, was 

chaired by HUD Secretary Marcia Fudge and Domestic 

Policy Advisor, Susan Rice. 

And in March, we watched the Vice 
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President of the United States, which was an 

extremely proud moment for myself and Members of the 

taskforce with heartfelt endorsement, the release and 

the adoption of the PAVE action plan. 

The action plan capped months of hard 

work and determination by a team of, as mentioned, 13 

federal and independent agencies seeking to speak in 

one voice by aligning and harmonizing regulations so 

that all families and neighborhoods will have a 

better chance to build intergenerational wealth 

through home ownership. 

Next slide. 

So, the action plan in summary, it's 

designed to provide an outline of the historical 

nature of discrimination and property valuation to 

examine the various forms of bias and most 

importantly, it describes solutions. 

I want to underscore that the work of 

PAVE was purposed to scope out solutions and 

collaborate with advocacy, industry, philanthropy, 

and researchers to ensure that equity is embedded in 
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the home buying process.

Next slide. 

Maureen gave a really good analysis of 

the historical nature of bias in the home appraisal 

process. 

Since the release of the action plan, 

undoubtedly, the question of whether we evaluated or 

relied upon enough or the right data to show that 

appraisal bias existed has definitely been a point of 

public contention.

What I like to highlight when I share 

information about PAVE is that we know that 54 years 

since the passage of the Fair Housing Act, the housing 

discrimination continues and the home ownership gap 

is wider than ever.

We know that discrimination has a history 

in the home-buying process. Mortgage redlining 

contributed to the home ownership gap and community 

disinvestment, steering and blockbusting, 

perpetuated segregation, the denial of homeowner's 

insurance contributed to blight and distressed 
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communities. 

And appraisal bias is a subset of that 

process and is a contributing factor for the 

valuation of communities of color. 

Next slide, please. 

One of the points that the action plan 

amplifies and a point that I deem worthy of discussing 

and sharing is the compounding effects of under

valuations when a home is undervalued under time. 

So, over that time, communities are 

impacted by these under valuations. In homeowners' 

experience, less gain of home equity and wealth when 

they sell or refinance a home, that happens to the 

individual. 

But what happens to the community at 

large is also the loss of wealth and the benefit to 

that particular community, creating less opportunity 

to pass wealth or to benefit from the wealth gaining 

opportunities.

And those examples of that are 

retirements and repairs, tuitions, not having access 
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to those funds to do those things. 

Next slide, please. 

I've layered the cause, consequences, and 

extent of the problem which the report was designed 

to do, but more importantly, I want to talk about 

some of the solutions that are detailed in the report. 

The planned details are a set of 

commitments and actions centered around several 

themes. First, enhancing oversight and 

accountability. 

The plan commits federal agencies to 

create a legislative proposal to modernize the 

government structure of the appraisal industry to 

improve transparency and public participation in the 

establishment of appraisal standards, which we heard 

was one of the recommendations earlier. 

Clarifying the application of the Fair 

Housing Act and ECOA through the issuance of guidance 

and improving coordination and collaboration between 

federal enforcement agencies.

One of the second areas we focused on was 
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empowering consumers, the plan establishes new ways 

to educate consumers about appraisals and obtains 

concrete commitment from embedding appraisal bias 

training in the housing counseling process to the 

issuance of guidance to improve the reconsideration 

of value process as well. 

Third, establishing quality control 

standards in automated valuation models. 

Again, we sought to ensure that these 

models did not rely upon biased data that could 

replicate past discrimination including through the 

intended inclusion of non-discrimination quality 

control standards in future proposed rulemaking. 

Fourth, cultivating an appraisal 

profession that's well trained and looks like the 

communities that it serves. 

As you heard from my colleague earlier, 

he gave a good account of the lack of diversity, the 

aging workforce of appraisers, and the need to be 

able to recruit and retain a diverse workforce.

And so the plan lays out a series of 
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actions to remove barriers of entry to make it 

difficult for underrepresented groups to access the 

profession and to strengthen those areas around antibias, fair housing, and fair lending training. 

And lastly, coordinated enforcement 

effort to keep industry accountable. 

Next slide, please. 

So, how will we do this? I want to talk 

a little bit about the future state of PAVE.

PAVE taskforce did not envision this to 

be a one-report wonder. I say that often and 

frequently, we did not. 

We had implementation in mind and we 

envisioned for stages in the implementation process 

or for the implementation of the plan and its name. 

We call it the PAVE action plan, not just the PAVE 

report. 

And since the release, the taskforce 

member agencies hit the ground running. 

My colleague, Luke, and other Members 

quickly formed a cohort around supervision agencies 
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and banking agencies to think more broadly about the 

commitments and how they can align.

And other members of the taskforce have 

already begun to put actions in motion. Part of this 

implementation was to create several phases and one 

of the other phases is engaging stakeholders. 

So, to date we've engaged philanthropic 

agencies such as Brookings, Policy Link, and Lisk to 

discuss ways to engage and regionalize the work. And 

so a couple of areas that I'd like to highlight. 

The City of Philadelphia, for example, 

has established a taskforce and will be releasing a 

report on appraisal bias within the City of 

Philadelphia and how they seek to address it. 

Also, the State of Maryland also formed 

a taskforce as well working closely with Prince 

George's County, as many of you may know of some of 

the media accounts there where individuals have 

experienced disparities in the valuation of the 

properties there. 

The finding on implementing long-term 
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initiatives, the action plan documents areas that we 

could not address in the limited time given and speaks 

to data and a research agenda.

With the FHA taking the lead, we're 

thinking through multi-agency MOUs to allow for data 

sharing and aggregation and HUD policy development 

and research team are also thinking through ways to 

further study and evaluate appraisals in the areas of 

taxes, manufactured homes and rural communities, 

areas that we again in that 180 timeframe were unable 

to really do a deep dive and do an analysis.

And lastly, we endeavor to hold ourselves 

accountable. We know this report was widely received 

publicly and because we had made commitments in the 

report, we will do just that, hold ourselves 

accountable.

And we developed internal mechanisms to 

establish and track milestones which we've documented 

in the report. 

Next slide, please. 

I'm going to highlight some of the action 
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items. 

There are 21 commitments that are borne 

in the report and as I mentioned, some of these action 

items are currently underway, in particular 

clarifying the application of the Fair Housing Act 

and ECOA. 

I think Maureen may have mentioned it and 

if not, we documented in the report early on that DOJ 

issued a statement of interest in the California case 

that was described earlier. 

And as a result of that, HUD, DOJ, and 

CFPB are working to align as a number of the appraisal 

cases increase. So, we're working collectively to 

think through guidance there. The mention of 

developing a legislative proposal, we're currently 

working to do that as well in tandem with the Domestic 

Policy Council. 

Legislative proposal is under review by 

principals to enhance the governance structure of the 

appraisal industry, thereby giving greater authority 

to the appraisal Subcommittee. 
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Then lastly, Maureen mentioned in her 

presentation the uniform residential appraisal form. 

And FHFA is currently working on the redesign of that 

form, hoping to make it publicly available for 

comment sometime in the near future. 

And we hope that the changes to the form 

will reduce the opportunities for bias and 

subjectivity in the process. 

Next slide, please. 

So, on the education and outreach front, 

many things I believe are happening collectively and 

just kind of organically throughout the dialogue and 

the opportunities for collaboration. But in 

particular, I'd like to highlight the launch of the 

PAVE website, which served as a flagship education 

outreach campaign providing links to agency websites, 

centralizing complaint processes, and serving as a 

trove of information regarding state regulations and 

the appraisal process generally. 

HUD and its Office of Housing Counseling 

are working collaboratively to incorporate and 
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develop a curriculum around appraisal bias to be 

built out into the housing counseling process and in 

training housing counselors.

Lastly, I think just in a united effort 

to require anti-bias and fair housing and fair 

lending training, again, my colleagues here, NOFA, 

the Appraisal Subcommittee, and others continue to 

engage the Appraisal Foundation, the Appraisal 

Institute, and states to adopt this measure. 

Next slide. 

Data and research actions, again, I think 

overarchingly and overwhelmingly, what we heard from 

industry, academia, and others is the need for data 

and research efforts to continue.

And I will say that the taskforce 

members, FHFA, FHA, USDA, all are working 

collectively to create again a multi-agency MOU that 

would allow for the sharing and aggregation of data, 

but also there are think-tanks to really work on and 

create opportunities for a repository of data that 

would allow for public access and greater research.
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And we're really excited about that 

initiative as well. 

Next slide, please. 

And here lastly, enforcement and 

compliance actions, as I mentioned earlier, the 

banking agencies are working collectively to align 

but also the enforcement agencies adopt this in fair 

housing, CFPB, DOJ, we continue to join ourselves in 

collective dialog in thinking through how to 

establish guidance and create tools that would help 

and assist us to better conduct investigations. 

In fact, FHFA, which has taken a huge 

lead, has positioned themselves in a matter of a week 

to share appraisal files with HUD's Office of 

Systemic Investigations that will allow investigators 

to better look at comparative data and to have more 

accurate account of when discrimination occurs in 

appraisal complaints.

Next slide, please. 

And finally, I'd just like to share, 

again, as we continue to do this work and make 
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strides, we started the taskforce with creating a set 

of opportunities that would add policy, meet people, 

and to make this real for the public at large.

And so again, I mentioned the DOJ 

issuance of a statement of interest, the FHA issued 

mortgage letter that clarified non-discrimination 

requirements as it relates to FHA appraisers. 

And again, the data sharing conversations 

among key federal agencies continues to be work that 

we are doing and I believe we will successfully 

achieve.

Next slide. 

In closing, I again, thank you to Luke 

and the Committee for inviting me to speak. If you 

have not had an opportunity to take a deep dive into 

the report, I ask you to check out our website, 

PAVE.HUD.gov. 

It's very interactive and it'll give you 

great information on the report, but also access to 

information surrounding many of the other things that 

I share with you today. 
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Thank you. 

MR. BROWN: Thank you, Melody, for 

describing all the many actions and focus areas of 

PAVE and particularly, thank you for your leadership. 

This has been a massive effort but it's important 

work so I want to thank you for that. 

So, I think these have been three great 

presentations. I mentioned earlier about the 

spotlight that's being placed on appraisal bias and 

appraisal industry. 

I think these three presentations really 

cut across all the various issues that are in the 

spotlight so I hope that was helpful to the common 

Members.

We probably should pause for a time-check 

because I think we're a little bit over. Liz, what 

are your thoughts on where we should go from here? 

MS. ORTIZ: I have at least 10 minutes 

for questions, Luke.

MR. BROWN: Ok. Great. Alright with 

that, I will open things up. Do any ComE-IN Members 
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have questions of our panel? I apologize if I'm 

missing any hands, feel free to speak up.

MEMBER MINTZ: I'll jump in where people 

figured out where the hands are, this is Jonathan 

Mintz. I want to thank you for a really eye-opening, 

informative presentation. 

It was in many cases difficult to hear 

and I think that's really important to squarely put 

these issues in front of folks that aren't steeped in 

this part of the business. 

And I just want to also really underscore 

how reassuring it is that all of this is drenched in 

recommendations and progress, ranging from new 

partnerships to new approaches to enforcement. 

So, I think all of that is just a real 

gift to this important issue. 

I guess the question that I have, I'm 

sure there's a back story and you can all use your 

discretion on how much of it you think you want to 

share, but I'm curious about where the profession has 

fallen down on self-regulation here. 
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And more importantly, that's maybe the 

gossipy part of the question, more importantly where 

or whether there's a point of intersection that can 

make the industry professional association a more --

to find their value add so that they're a part of the 

solution here. 

MS. YAP: You go ahead, Melody. 

MS. TAYLOR: I'll jump in quickly and say 

just as a part of this endeavor, the work that we did 

with the Appraisal Subcommittee, they play a very 

critical and key role in the governance and the 

alignment of working with states, state regulators, 

but also with regards to appraisal standards and 

qualifications.

And I think you'll see in the NOFA report 

they did a really deep dive on that and provided 

recommendations. 

But again, I think working closely with 

the Subcommittee on the legislative proposals that 

are going to be put forward, that would give them 

greater governance will be a huge game-changer in the 
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regulation of appraisers. 

MR. BROWN: Does somebody else want to 

jump in before I go to Director Chopra?

MR. CHEN: One thing that maybe I'll just 

add to that is the opportunity right now is to be 

able to look at different methods and different ways 

to approach the appraisal practice itself, which 

really hasn't changed for multiple decades, it's been 

a paper-based process.

Over the past few years we've seen a lot 

of investment on moving the mortgage process off to 

more of a digitized process which gives you more 

transparency and oversight as to what's even going on 

and that data being available for analysis. 

I think we're at an opportunity where we 

can now start to move the appraisal practice and the 

appraisal manufacturing process into the digitized 

world as well so that, again, we can answer questions 

like yours with a lot more definitive, I think, 

results. 

And that's why the request for data 
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sharing for the digital data we already have is really 

taking place, so that we can dive in deeper on these 

issues and understand root cause and analysis. 

MR. BROWN: Thank you. Director Chopra, 

you had a question? 

DIRECTOR CHOPRA: Yes, I just wanted to 

echo something that Melody said and I also want to 

thank Melody for leading so much of the PAVE taskforce 

and really catalyzing a lot of action. 

Melody mentioned the Appraisal 

Subcommittee and for those who are not familiar, it's 

a panel of regulators as well as HUD and the Federal 

Housing Finance Agency that does have some key roles. 

The CFPB is currently serving as chair of 

that Subcommittee and a key piece of our focus is 

oversight of the Appraisal Foundation. 

The Foundation is a nonprofit 

organization that wields a whole lot of power when it 

comes to appraisal standards and making sure that 

these Subcommittee, which is the regulators, is 

watching the foundation closely is very, very 
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critical. 

I will also, just to Jonathan's question, 

add I really see the appraisal community as a key 

part of this, I think right now many appraisers really 

feel that they have a unique value to add. 

But many times appraisal management 

companies in the industry structure limit their 

ability to really do their job. 

So, figuring out the balance between 

algorithmic appraisals included automated valuation 

models and human appraisals I think is a core focus 

for many of us. 

And again, the report that the National 

Fair Housing Alliance conducted for the Appraisal 

Subcommittee and the work with the foundation and all 

of the PAVE taskforce work has really made sure that 

all of the regulators are putting this higher on the 

agenda.

And again, I just want to thank Melody 

and her team for all the work she's done. 

MR. BROWN: Does anyone want to add 
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thoughts to Director Chopra's point? Any other 

questions for the panel? If not, I'll jump in for a 

second and ask a question of Melody. 

Melody, a lot of issues you've walked 

through. 

Obviously, solving these problems is not 

going to be very easy so I'm curious to hear from you 

about some opportunities but yet, what are the 

biggest obstacles for government agencies to move 

forward and address the issues that are outlined in 

the PAVE action plan. 

MS. TAYLOR: Thanks, Luke, I'll start 

with the obstacle because it's just one word, time. 

We have two years remaining to be able to reach some 

of these milestones. 

I believe that we are on the right path 

to do so but I think the biggest obstacle would be 

time and making sure that we embed in each of the 

federal agencies that may not have appraisal as a 

part of its book of business or portfolio to embed 

this work so that it's not an initiative but it is a 
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part of the work that's being done by the Agency. 

So, time would be the obstacle. The 

opportunities I think we heard it resonate in each of 

the conversations today, the opportunity to dialog 

and collaborate. We have created that in the 

listening sessions that we held throughout the 

development of the report.

I think unique and a great opportunity 

for dialog with the industry, with academia, with 

Federal Government. 

In my career as a career federal servant, 

I haven't seen this kind of synergy where all these 

agencies and industry and advocacy are coming 

together on a civil rights issue and have one voice 

around it. 

There have been some areas of pushback 

regarding data and whether or not certain data was 

used. 

But resoundingly, I believe that all of 

the areas that the report landed on, reconsideration 

of value, quality control standards, diversity in the 
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industry, when we held the listening session, those 

were some of the areas that each one of the industries 

provided as areas that they wanted to see change in. 

And I believe those are the opportunities 

that we can seize upon. Thank you. 

MR. BROWN: Thank you, Melody, that's 

helpful and I think maybe we have time for one more 

quick question. 

Maureen, you're a fair housing fair 

lending expert, you've had a number of roles in the 

industry addressing these types of important issues. 

Given the work that you've done on the 

report, was there any one or two things that surprised 

you that you didn't expect to see yet you did? 

MS. YAP: Thanks, Luke, I appreciate 

that. And I think what really surprised us was the 

state of the industry and where it is. Kenon alluded 

to that too, that a lot of the methodologies haven't 

changed in decades.

And I think for most of the folks on the 

common group here who have worked in this area for so 
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long, we'd have been really surprised as well. 

I can remember in the 1990s when the DOJ 

first started bringing cases against mortgage lenders

and the lenders would say, well, when it comes to 

underwriting there's the five Cs, and one of them was 

character and I have to look the borrower in the eye 

and make a determination.

And that was just taken as gospel at the 

time and now it sounds cute and quaint, but that's 

kind of where a lot of what we're hearing about the 

appraisal industry, that it's more art than science.

You even have some case law where judges 

deferred to the appraised value because it was more 

art than science. 

But to Kenon's point about the digital 

revolution, the data revolution, there are many ways 

that this can be fair, transparent, and data-driven.

And I'll just end by saying the second 

big surprise was how well received it was. So, 

definitely, many thanks to Melody and her team for 

the Herculean task that they executed in such a quick 
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turnaround. 

But also, we did many presentations to 

industry associations like REVAA and we didn't know 

how they were going to react, especially when they 

saw the disconnect between where they are and where 

mortgage lending underwriting pricing, homeowner's 

insurance, all of the changes and limits on 

discretion that are part of the housing market.

But we have found that the industry trade 

associations, the appraisers that we have talked to 

want to jump in with both feet. 

They are excited to learn, they want to 

do better, they want to be a part of this conversation 

and help shape it.

So, that was a really pleasant surprise. 

MR. BROWN: Interesting, well thank you 

very much, Maureen. I see that the Acting Chairman 

Gruenberg has his hand up. 

ACTING CHAIRMAN GRUENBERG: One, I wanted 

to thank the FDIC Staff for putting together such a 

thoughtful panel on an important issue. It really 
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has been a terrific discussion and I'm very 

appreciative to the panel members.

The way that the PAVE report has elevated 

an issue of extraordinary public importance that I 

think lacked widespread public appreciation is really 

kind of a case study or a model of how to bring an 

important issue of public policy to light.

And the one question I did want to ask, 

and Maureen may have answered it already, aside from 

all of the policy proposals, the extraordinary 

insularity of the appraisal profession jumps out at 

you just when you look at the numbers that Kenon 

presented in his presentation. 

Do you think that the appraisers 

themselves are aware of that and understand that 

there is a need for a chance and in some sense, it 

will start with them if we're going to make progress 

on this issue?

I'd ask all three of you, if you would, 

to respond to that. 

MR. CHEN: Thank you so much for the 
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question. And I do think that awareness is growing 

and this is maybe one of the unexpected impacts of 

COVID-19 and of the pandemic. 

And with the roll-out of appraisal 

flexibilities and the need to create social 

distancing for appraisers, that event of saying we 

can't work the way that we have worked traditionally 

and we need to find new methods and new ways to 

continue appraising really did accelerate a number of 

both conversations and awareness of things for two 

reasons.

Number one is the need to embrace 

technology to do things we haven't been able to do 

before. In other words, see into the property and 

see what the property is without actually visiting 

the property. 

And then number two, the historic and 

record volume particularly within refinancing that 

we've had over the past two years has also I think 

demonstrated to many that the current capacity within 

the appraiser workforce is not set up to handle the 
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needs of the financial system. 

In many areas, especially Texas and 

others, we've seen turn times extended to six weeks 

plus. We've seen rising costs to acquire an appraisal 

and so the need for new talent to come into the 

industry I think is becoming evident. 

So, when you layer that with the 

understanding of the current demographics and the 

current supervisory model, which really limits 

diversity, both diversity in terms of age as well as 

race, I do believe that's awoken a number of 

participants to the need to embrace a different 

process.

MS. YAP: I'll build on Kenon's comments, 

that was a great question, thank you, and I will use 

it to insert a shameless plug. 

So, like I said, the reaction we've 

gotten has been overwhelmingly positive and the folks 

that we've talked to at the appraisal trade 

associations are very interested in what to do next. 

However, having worked in this field for 
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a long time, 12 years at the Federal Reserve, and I'm 

sure all of the folks on the phone here know nothing 

focuses the mind like an enforcement action or 

possible enforcement.

So, our shameless plug is to encourage 

quick action on one part of the PAVE action plan, 

which is for the federal regulators and the 

enforcement agencies to quickly put out public exam 

procedures and investigation procedures so that the 

appraisers and the lenders and the AMCs know the 

federal regulators are quite serious about looking at 

this issue.

You can't really tell when an enforcement 

action can be appropriate. 

You only want to go forward if it is 

appropriate but exam procedures for a law that's been 

on the book they 1968 seems very appropriate and it 

also gives concrete guidance to the industry as to 

how to move forward and what they should be doing in 

their compliance management systems.

Thank you for that opportunity to share 
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that view.

MR. BROWN: Thank you, Maureen, and I 

will say the banking agencies are extremely focused 

on exam procedures in this space so you'll hear more 

on that. Melody?

MS. TAYLOR: Sure thank you for that. I 

will say, as Maureen mentioned, my background is fair 

housing and so shameless plug for enforcement as 

well. 

I will say from HUD's perspective and the 

Office of Fair Housing Equal Opportunity, as the 

number of complaints rise, the Agency is working very 

hard at creating some quality control standards 

around enforcement work, making sure that there are 

public interest relief when cases or complaints are 

conciliated and that investigators have some 

consistency in the way that cases are being 

evaluated.

And we are working closely with DOJ and 

CFPB in discussions around those cases. 

MR. BROWN: Thank you, and apologies, I 
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can't see all the hands up. Speak now if someone has 

a hand up and I'm missing it but I'm sure Liz is 

saying don't say that, we've got to move on.

With that, unless somebody wants to 

really say something here, Melody, Kenon, and 

Maureen, thank you very much, fantastic conversation. 

I appreciate it very much. 

With that, Liz, I'm going to take the 

baton and throw it back to you. 

MS. ORTIZ: Thank you, Luke, thank you, 

panelists, that was great. So, now it is time for 

another short break, let's everyone plan on being 

back together at 3:55 p.m. for the CRA panel. Thank 

you. 

(Whereupon, the above-entitled matter 

went off the record at 3:49 p.m. and 

resumed at 3:55 p.m.) 

MS. ORTIZ: All right. Welcome back, 

everyone. I'm going to introduce Jonathan Miller

who's going to moderate our last panel of this 

afternoon on the Community Reinvestment Act. 
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Jonathan?

MR. MILLER: Thank you, Liz. Very happy 

to be here with the panel to talk about the new 

proposed rule on the Community Reinvestment Act 

regulation. So today we're going to start by sharing 

the agency's objectives for the proposal and then 

give a high level overview of some of the key topics 

like assessment areas, qualifying activities, and the 

overall evaluation framework.

We'll highlight areas of interest 

regarding financial and economic inclusion 

throughout. The NPR strengthens the serious role in 

financial inclusion by providing consideration for 

activities that may address inequities in credit 

access for LMI communities. In the new CRA proposal, 

the agencies recognize the importance of community 

banks of larger institutions, of CDFIs and MDIs, 

minority depository institutions, and the role they 

play in providing equitable finance to access to 

consumers and communities, one of the core goals of 

the rulemaking effort.
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And then at the end, we will leave time 

for your questions and comments. Because this 

conversation is taking place while the comment period 

for the proposal is still open, a summary of this 

discussion will be made part of the public record as 

a comment. I want to introduce the panelists and 

then I'll go over a few of the high level goals here.

So the first panelist is Rick Schwartz, 

counsel in our legal division, then Patience 

Singleton, a senior policy analyst in our policy 

branch, and then Pam Freeman, chief of fair lending 

and CRA in our exams groups here at the FDIC. 

Next slide, please. 

I should say all three of the panelists 

are longstanding experts on the Community 

Reinvestment Act. 

Next slide, please. 

So let me just go over the timeline 

really quickly.

The Community Reinvestment Act was 

originally passed as I'm sure most of you know in 
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1977. It's one of several seminal pieces of 

legislation enacted to address inequities in access 

to credit. Under the CRA statute, financial 

institutions have an affirmative obligation to help 

meet the credit and banking needs of their local 

communities, including the low and moderate income 

communities consistent with safe and sound 

operations. The Federal Reserve Board, the FDIC, and 

the Office of the Comptroller of the Currency are 

responsible for issuing regulations to implement and 

determine how banks are going to be evaluated under 

the Community Reinvestment Act.

Building on previous feedback from 

stakeholders, research, the agencies released a 

notice of proposed rulemaking or an NPR to update the 

CRA regulations on May 5th earlier this year. The 

NPR requests comments on all aspects of the reg text 

and the policy proposals. The comment period closes 

on August 5th, a few weeks -- a little bit more than 

a month from now.

We really urge the members of this 
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committee, the organizations you represent to put in 

comments. 

Next slide, please. 

I'm going to talk a minute about the 

broad objectives that we're seeing to achieve with 

this rulemaking. First, the NPR would expand access 

to credit investments and basic banking services in 

low and moderate income communities, both urban and 

rural.

A major goal for us is to strengthen CRA. 

We do this by expanding the geographic area in which 

we evaluate the bank's lending by adding auto lending 

-- the evaluation of auto lending -- for the largest 

banks and by raising the bar for banks to earn each 

rating category in CRA, low satisfactory, high 

satisfactory, outstanding, et cetera. So I would 

summarize the first objective as expand the reach of 

CRA and raise the bar. The second key element, 

adapting to changes in the banking industry, 

including internet and mobile bank.

For example, the proposal would make 
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changes in how assessment areas are determined. This 

would be that banks will be evaluated on their 

mortgage and small business lending whether it is 

done from a branch in the traditional way or online. 

This is a business model neutral approach.

The third element I want to highlight is 

the goal of providing greater clarity, consistency, 

and transparency in this CRA evaluation with 

stakeholders across the spectrum have asked for. One 

way the proposal would accomplish this is by adopting 

a metrics-based approached to CRA evaluations for 

retail lending and community development financing 

which will also include public benchmarks for greater 

transparency, certainty, and consistency. We are 

aiming to ensure that the primary purpose of 

community development activities which we will define 

more specifically in the proposal is to serve low and 

moderate income, underserved, and rural communities.

The fourth element I'd like to highlight 

is that the CRA proposal tailors the CRA evaluation 

and data collection to bank size and business type. 
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All banks are not the same, and all communities are 

not the same. The proposal kept categories similar 

to the ones we have today, small, intermediate, and 

large banks.

The proposal tailors the test and data 

collection requirements to each of those categories. 

There's no new data collection for small or 

intermediate banks. We sought to leverage existing 

data as much as possible to do the effective review. 

So with that very broad overview of our objectives, 

I'm going to turn the presentation over to Rick 

Schwartz. Rick?

MR. SCHWARTZ: Thank you, Jonathan. 

Next slide, please. 

The proposal on assessment areas relate 

to where banks are assessed for their CRA 

performance. Under the existing regulation, banks 

are evaluated where they have main offices, branches, 

and deposit-taking ATMs.

Our goal was to maintain a focus on 

evaluating banks where they have branches but to also 
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take into account the growing use of mobile and online 

banking. The proposal would retain assessment areas 

around main offices and branches as well as deposittaking remote service facilities which include ATMs. 

The proposal refers to these as facility-based 

assessment areas.

Large banks, which under the proposal 

would be banks over 2 billion dollars, would be 

required to delineate facility-based assessment areas 

consisting of one or more MSAs or metropolitan 

divisions or one or more contiguous counties. For 

intermediate and small banks, those under 2 billion 

dollars, however, the proposal would provide these 

banks with greater flexibility and would allow them 

to delineate partial county assessment areas 

consistent with current practice and recognizing 

their smaller service areas. 

Next slide, please. 

With regard to assessment areas outside

of facilities, the NPR would require large banks to 

delineate retail lending assessment areas where a 
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bank would have a concentration of home mortgage 

and/or small business lending outside of its 

facility-based assessment area.

Under this proposal, a large bank would 

delineate retail lending assessment areas where it 

had an annual lending volume of at least 100 home 

mortgage loan originations or at least 250 small 

business loan originations in an MSA or a nonmetropolitan area of a state for two consecutive 

years. Intermediate and small banks would not be 

required to delineate retail lending assessment 

areas. Second, the NPR would evaluate the remaining 

lending outside of bank assessment areas described as 

the outside retail lending area in the proposal.

As noted on the slide, the proposal 

clarifies the areas where a bank would be evaluated 

on their community development financing performance. 

To provide greater certainty, the agencies propose to 

consider all community development qualifying 

activities regardless of location for banks evaluated 

under the new community development financing test to 
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be discussed by Patience in a few minutes. CD loans, 

investments, and services outside of facility-based 

assessment areas would be considered at the state, 

multi-state MSA, and at the institution levels as 

applicable. 

Next slide, please.

So Jonathan mentioned community 

development. So there's some pretty significant 

changes with regard to community development, or I'll 

call them CD definitions. The proposal response to 

stakeholder feedback about improving transparency and 

certainty about the CD activities that are eligible 

for CRA credit.

Under the existing CRA regulation, CD 

activities fall into four broad categories: 

affordable housing, community services, economic 

development, and revitalization and stabilization. 

The agencies propose to establish 11 CD categories 

that would establish specific eligibility standards 

for a range of loans, investments, and services. One 

key part of the proposal to highlight is the primary 
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purpose standard.

The standard has two overall prongs. The 

first option would look at whether a, quote, majority 

of dollars, beneficiaries, or housing units, unquote, 

go to the enumerated CD purposes. Or in cases with 

less than a majority for the entire activity 

benefitting low and moderate income individuals or 

communities, the second option would look at whether 

the express bona fide intent of the activity meets

the CD standard. For additional clarity, the 

agencies propose to maintain a publicly available 

illustrative list of eligible CD activities.

In addition, the agencies propose a 

process open to banks to confirm the eligibility of 

CD activities in advance. 

Next slide. 

This slide lists the 11 categories of CD 

activities proposed in the NPR. I'll highlight a few 

of the provisions included in these definitions. 

First, to provide clearer standards, the agencies 

propose to keep affordable housing.
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This is intended to recognize the 

importance of promoting affordable housing for low 

and moderate income individuals. In addition to the 

current definition, this includes a new provision 

defining naturally occurring affordable housing to

recognize the importance to communities of multifamily rental housing that does not involve a 

government program. Second, the NPR would apply 

targeted criteria for place-based activities by 

replacing the current revitalization and 

stabilization activities component of the definition 

with six new categories of CD activities.

All of these place-based proposals 

specify that eligible activities may not displace or 

exclude low or moderate income residents in targeted 

census tracts. One of the place-based definitions is 

for disaster preparedness and climate resiliency 

covering activities to help individuals and 

communities prepare for, adapt to, and withstand 

natural disasters, weather-related disasters, and 

climate-related risks. Another place-based 
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definition is for activities for native land areas. 

The provision in this category reflects the unique 

economic, credit, and financial service needs of 

native and tribal communities. Excuse me.

Third, the NPR includes a specific 

category for investments, loans, and other activities 

undertaken in cooperation with minority depository 

institutions, women depository institutions, low 

income credit unions, and, this is a new addition, 

Treasury Department certified CDFIs. CD activities 

that support or are conducted in partnership with 

those entities are considered particularly high 

impact and responsive when assessing a bank's CD 

activities. Now I'm going to turn over the 

presentation to Patience to discuss the overall 

evaluation framework.

MS. SINGLETON: Thank you, Rick. This 

chart summarizes the proposed evaluation approach for 

all bank types (audio interference) to be evaluated 

under an approved strategic plan. The agencies 

propose a tailored evaluation framework with 
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different performative banks of different sizes and 

business models.

As you can see, the proposal would have 

three categories based on bank size, large, 

intermediate, and small. The proposal increased the 

size threshold for each type of bank. It defines a 

small bank as a bank with average assets of less than 

(audio interference) either of the prior two calendar 

years. An intermediate bank (audio interference) 

assets of at least 600 million in both of the prior 

two calendar years and less than 2 billion in either 

of the prior two calendar years. (Audio 

interference) would define a large bank as a bank 

with average assets (audio interference) in both of 

the prior two calendar years.

In addition (audio interference) 

designated as a wholesaler for a limited purpose 

bank. Four tests are proposed for large banks. 

Retail lending tests, retail services and products 

test, community development (audio interference), 

community development services test. Each test 
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focuses on activities that advance financial entities 

and to LMI individuals.

Each test receives a separate conclusion 

that is linked to a bank's overall institution 

rating. I will discuss more detail about these tests 

shortly. For retail lending, entities and banks 

would be evaluated under the proposed retail lending 

test.

Regarding community development 

activities, an intermediate bank would be evaluated 

under the community development test currently 

applicable to intermediate (audio interference) 

unless they opt to be evaluated under the proposed

community development financing test. Under the 

proposal, small banks would continue to be evaluated 

under the existing small bank performance standards 

unless the bank opts into the proposed retail lending 

test. Wholesale and limited purpose banks evaluated 

under the proposed community development financing 

test, wholesale, or limited purpose banks, which is 

a modified version of community development financing 
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test.

There would be a (audio interference) 

strategic plan option for all banks subject to 

approval by the bank's regulator. 

Next slide, please. 

The next few slides provide details on 

(audio interference). I won't go over all of the 

content. They're here for your reference.

The proposed (audio interference) test 

would measure how well a bank's retail lending meets 

the (audio interference) of LMI individuals, small 

businesses, small (audio interference), and LMI 

census tracts through an analysis of lending (audio 

interference) distributions. Six retail product 

lines would fall under the (audio interference) home 

mortgage loans, open end home mortgage, multi-family 

loans, small business loans, (audio interference) 

loans, and automobile loans. 

Next slide, please. 

The proposal provides a clear standard 

for determining (audio interference) loan product 
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that's considered a major product line and included 

in the retail lending test (audio interference).

Under the proposed major product line 

standard, our retail product except for automobile 

loans (audio interference) would be evaluated under 

the retail lending test when it makes up at least 15 

percent of dollar value of a bank's retail lending in 

a specific assessment area. Product lines could vary 

across the bank's assessment areas as well as the 

bank's (audio interference) if applicable. A 

different approach would be used for auto loans as 

they typically involve smaller dollar amounts.

Two percentages would be averaged to 

determine if the 15 percent threshold is met (audio 

interference) percentage of auto lending by dollar 

volume and the percentage (audio interference). 

Next slide, please. 

The proposal would establish a set of 

retail lending metrics (audio interference) to 

evaluate a bank's retail lending, including lending 

to low income and moderate-income (audio 
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interference).

MR. MILLER: Oops. It seems like we've 

lost Patience. I'll take over for her here. So with 

apologies for not being as well prepared on this as 

she would've been.

So I guess I would summarize the retail 

lending test as saying we're going to be doing going 

forward the kinds of analyses -- very similar to the 

kinds of analyses we do today in terms of the 

distribution metrics, both the geographic 

distribution and the borrower distribution. What 

we've done in the past sort of behind the curtain 

we're now going to do in front of a curtain. So 

you'll see and the public will see, the bank will see 

all the analysis -- all the analysis that we're going.

But the same -- but the geographic and 

borrower distribution tests are going to be the --

are going to be the same. 

Next slide, please. 

I'm going to highlight a few important 

points on this slide. The proposal would also 
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establish lending distribution performance ranges for 

each rating category using a consistent and 

transparent method.

The performance ranges would be tailored 

to each assessment area because the methodology 

relies on local data specific to that assessment 

area. Thresholds would be set using the local data 

referred to as community benchmarks which reflect 

information such as the percentage of low income 

families in an assessment area and market benchmarks 

which represent the aggregate performance of other 

reported lenders. In summary, the proposed retail 

lending test would provide the bank with greater 

certainty about CRA performance expectations, 

consistently tailor expectations to the unique 

conditions in different markets, and automatically 

adjust performance thresholds over time in a way that 

reflects changes in the business and economic cycles. 

Next slide, please.

Turning next to the retail services and 

products test. The agencies proposed modernizing the 
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existing evaluation of a bank's products and services 

by adding a more explicit focus on the financial 

inclusion potential of these products and by adding 

specific measures for evaluation such as availability 

and usage. This test would evaluate the availability 

and responsiveness of a bank's retail banking 

services and products targeted to LMI individuals and 

LMI census tracts.

The test would evaluate two prongs: 

delivery systems and credit and deposit products that 

are responsive to the needs of LMI consumers and 

communities. While the evaluation would continue to 

be predominately qualitative in nature, it would also 

incorporate some quantitative measures as guidelines. 

For large banks with assets of 10 billion dollars or 

more, agencies will evaluate availability and usage 

of the responsiveness of the accounts.

For example, BankOn accounts and other 

safe, low cost transaction and savings accounts would 

be evaluated under this portion of the test. In 

addition, the NPR specifies under the retail services 
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and products test that retail lending focused 

partnerships with minority depository institutions, 

women's depository institutions, low income credit 

unions and Treasury Department certified CDFIs should 

be considered when assessing the responsiveness of a 

bank's credit products in meeting the needs of the 

LMI communities. Now I'm going to go turn over the 

presentation to Pam Freeman.

MS. FREEMAN: Thank you, Jonathan. 

Next slide, please. 

So I'm now going to focus on the 

community development financing test which would use 

metrics and benchmarks to standardize the review of 

community development loans and investments while 

also incorporating a qualitative impact review of 

community development financing activities. The 

agencies would evaluate community development loans 

and investments in facility-based assessment areas 

plus the state, multi-state MSA, and nationwide 

levels.

Banks would receive consideration for 
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qualifying activities anywhere in a state or a multistate MSA in which they maintain a facility-based 

assessment area. And in addition, banks are going to 

receive consideration at the institution level for 

any and all qualifying community development 

activities conducted. The proposed community 

development financing metric would measure the dollar 

value of a bank's community development loans and 

community development investments together relevant 

to the dollar value of deposits.

And that's as opposed to the separate 

tests that we currently use for large banks. This is 

going to allow banks to engage in the activity best 

suited to their expertise and that is most needed for 

the community development project that the bank is 

financing. In addition, the agencies propose to 

count both new originations and prior activities 

remaining on the bank's balance sheet and the 

numerator of the metric in order to emphasize the 

provision of long term capital. 

Next slide, please.
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The proposed community development 

services test would evaluate the extent to which a 

large bank provides community development services. 

The evaluation would be primarily qualitative and 

would be based on any relevant information provided 

by a bank, including information such as the total 

number of hours for all community development 

services performed by the bank. The agencies propose 

retaining the current definition of community 

development services to include activities that have 

as their primary purpose community development and 

are related to the provision of financial services.

Activities that reflect other areas of 

expertise of a bank's employees would also be 

considered to be related to the provision of 

financial services. In addition, the agencies 

propose that in non-metropolitan areas banks may 

receive community development service consideration 

for volunteer activities. The meeting identified 

community development need, even if unrelated to the 

provision of financial services.
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And moreover, given the importance of 

financial literacy, the NPR proposes to grant CRA 

consideration for all financial literacy programs 

regardless of the income level of the beneficiaries. 

Next slide, please. 

Now I'm going to turn back to the impact 

review that I mentioned. So the agencies propose a 

set of impact factors that would inform the impact 

review for the community development financing and 

community development services test.

These factors would include but would not 

be limited to the specific factors proposed in the 

regulation and presented on this slide. Some 

examples of the factors proposed in the regulation 

are activities serving persistent poverty counties, 

activities and geographies with low level community 

development financing, activities that support 

affordable housing in high opportunity areas, and 

activities that support or are conducted in 

partnership with a minority depository institution, 

women depository institution, low income credit 
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union, and Treasury Department certified CDFI. Also 

important for banks and organizations that you 

represent, community development activities that 

result in a new community development financing 

product or service for low or moderate income 

individuals and families are considered particularly 

high impact and responsive when assessing a bank's 

community development activities. 

Next slide, please.

So the next several slides focus on 

ratings. Again, most of this detailed information is 

here for your reference. So we are proposing to 

provide greater transparency and consistency on 

assigning conclusions and ratings for a bank's 

overall performance, and it's grounded in performance 

in its local communities.

But also under the methodology proposed 

in the NPR, each performance test would result in a 

performance score and rating at the state, multistate MSA, and institution level. With respect to 

conclusions, we're going to maintain the current five 
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categories, outstanding, high satisfactory, low 

satisfactory, needs to improve, and substantial 

noncompliance. And then for ratings, we're proposing 

to keep the four categories of outstanding, 

satisfactory, needs to improve, and substantial 

noncompliance. 

Next slide, please.

For large banks, the agencies propose to 

determine a bank's state, multi-state MSA, and 

institution rating by combining the bank's 

performance scores across all performance tests. The 

agencies propose to maintain the emphasis on retail 

lending and recognizing importance of community 

development lending and investments by giving these 

tests the heaviest weights. So the proposed weights 

are 45 percent for the retail lending test 

performance score, 30 percent for the community 

development financing test performance score, 15 

percent for the retail services and products test, 

and 10 percent for the community development services 

test.
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In addition to the weighting, the 

agencies propose retain the requirement that as 

applicable for each state and multi-state MSA and at 

the institution level the retail lending test 

conclusion for a large or intermediate bank needs to 

be at least low satisfactory in order for the bank's 

overall rating to be satisfactory or higher. 

Next slide, please. 

Just a few items to note for intermediate 

banks, the agencies propose to weight both the retail 

lending test and the applicable community development 

test at 50 percent each. And that's consistent with 

the current requirements.

However, the agencies propose not 

applying the current requirement that an intermediate 

bank must receive a satisfactory rating in both the 

retail lending test and intermediate bank community 

development evaluation. However, as I just 

mentioned, an intermediate bank would need to receive 

at least a low satisfactory on the retail lending 

test in order to receive an overall satisfactory at 
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the institution level. Small banks would be 

evaluating using the status quo small bank lending 

test.

So their rating would be based on the 

lending test performance. Small banks would have the 

option to submit retail services and community 

development activities for consideration. But that's 

to elevate a satisfactory rating to an outstanding 

rating. However, they could receive an outstanding 

rating based solely on retail lending performance. 

Next slide, please.

And finally, we turn our attention to 

data collection and reporting which is covered in the 

next two slides. We recognize the importance of using 

existing data sources where possible and of tailoring 

data requirements. Under the proposal, small and 

intermediate banks would not have any new data 

requirements with the required performance tests.

Large banks with assets over 10 billion, 

agencies propose new reporting requirements for

deposits data and automobile lending data. FDIC 
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summary of deposits data would be used for banks with 

assets of 10 billion or less, although individual 

banks could choose to voluntarily collect and 

maintain this deposits data. 

Next slide, please. 

The agencies propose to require all large 

banks, wholesale and limited purpose banks, and 

intermediate banks that opt in to the community 

development financing test to collect and maintain 

the community development financing data.

And this data would be necessary to 

construct the community development financing metrics 

and benchmarks used to consistently evaluate the 

dollar amount of the banks community development 

lending and investments. The agencies also propose 

to require that large banks with assets over 10 

billion collect, maintain, and report limited 

community development services data in a prescribed 

format. And that would be necessary for the metricsbased evaluation of these community development 

services activities.
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No other bank would be required by 

regulation to collect such data. And regarding 

retail services and products, the agencies propose 

that large banks be required to collect and maintain 

to support the proposal's branch analysis and remote 

service facilities analysis in a prescribed format. 

And in addition, large banks with assets over 10 

billion would have new data requirements for deposit 

products and digital and other delivery systems.

This would facilitate a review of the 

largest banks performance regarding whether digital 

and other delivery systems and deposit products like 

low cost bank accounts are responsive to the needs of 

low and moderate income individuals and communities. 

And on that, we can go to the last slide. And we 

hope you found the presentation informative, and we 

are available for questions and comments.

MR. MILLER: Thank you very much, Pam and 

the other -- and Rick and Patience. Patience is back, 

I think.

MS. SINGLETON: I'm back.
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MR. MILLER: Good.

MS. SINGLETON: I've been on since 1:00 

o'clock, and it goes out during my presentation. 

Sorry. I've been on since 1:00. Go ahead.

MR. MILLER: So this is the point where 

we're happy to take any questions or comments you may 

have. I am sort of monitoring to see if -- please 

raise your hand or just jump right in. People are 

talking to us all the time about CRA. So I'd be 

amazed if nobody here had any thoughts about it.

MEMBER KELLY: Hey, Jon. This is Kenneth 

Kelly. I have a question for you.

MR. MILLER: Yes?

MEMBER KELLY: If I look out five years 

from now, what would be the result of the plan being 

implemented?

MR. MILLER: Well, that's a speculative 

question. I think -- so the --

MEMBER KELLY: And let me phrase it and 

give you a chance to think about it.

MR. MILLER: Well --
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MEMBER KELLY: If you kind of begin with 

the end in mind, I thought it was said earlier in '77 

this was to deal with inequities. So we're in 2022. 

I think there was a revision at some point in time. 

But long story short, 5, 10, 15 years from now, what 

do you think some outcomes would be from what we're 

trying to put forth here?

MR. MILLER: So I think if you go back to 

what we laid out as in one of the first slides the 

objectives of the rulemaking, I think what we're 

really trying to do is expand the reach of the 

Community Reinvestment Act. And the proposal does 

that by covering -- evaluating banks in a broader set 

of geographies. It does that by incorporating for 

the first time in the lending test at least one kind 

of consumer lending for the largest banks, auto 

lending. And it does that by establishing and by 

raising the bar the amount of lending that a bank 

will have to do compared to today to get a low 

satisfactory, a high satisfactory, and outstanding. 

So my expectation if the rule is finalized in the 
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form it was proposed, and of course we have to take 

all the comments and --

MEMBER KELLY: Sure.

MR. MILLER: -- consider the comments. 

So that's certainly -- and we expect to make changes 

based on those comments. But if the goal of the 

proposal is that you'll see more credit available to 

low or moderate income borrowers and low or moderate 

income communities in a nutshell.

MS. SINGLETON: Yeah, can I piggyback on 

that, Jonathan. Just I think we stressed in the 

presentations, rural areas that are often 

underserved, metropolitan areas where there may not 

be granted access. And there's a (audio 

interference). So we hope that there's more credit 

in capital and service provided in those areas which 

is part of the objectives of the proposed rule.

MS. FREEMAN: I would like to expand on 

that a little bit too. I think both those are great 

comments. And as Jonathan mentioned, we're hoping 

that this is going to help address inequities and 
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credit access, especially in low and moderate income 

communities and to low and moderate income 

individuals and families.

And I would hope whether it's this 

proposal or some iteration of this proposal that we 

come out as a final rule that it absolutely 

accomplishes that. Right now we've increased the 

areas where retail lending is going to be considered. 

It'll be in these new retail lending assessment 

areas, and it'll be outside of those areas that we've 

never done that before.

Now we're going to absolutely consider 

community development everywhere. So we've been very 

clear about that. We're going to come out with this 

very clear qualifying list of activities, and we're 

going to give preapproval on activities so that way 

banks can have assurances of what they're going to do 

is going to count.

And we're going to be more rigorous. And 

then we're also going to encourage partnerships with 

minority depository institution and Treasury 
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certified CDFIs. We included that as a specific 

definition for community development. We've 

considered that to be an impactful and responsive 

activity. So hopefully all of these will have more 

impact in the low and moderate income.

MR. MILLER: Thank you, Patience and Pam. 

Any other --

MEMBER KELLY: Thank you.

MR. MILLER: Yes, sir. Any other 

questions or comments?

MEMBER CAMPER: I have a comment and a 

question.

MR. MILLER: Okay, Naomi.

MEMBER CAMPER: Yes, so first of all, 

thank you all. I mean, I think it was in even the 

opening comments this morning that different 

participants today noted the historic nature of this 

proposed change, 700 pages, nights and weekends, 

months and months. I know you've heard from both EBA 

and member banks a great deal, and we're so 

appreciative of the thought that has gone into this 
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and so many elements of the proposal.

Love it when you sort of say words like, 

tailored, and acknowledgment especially across the 

broad spectrum of banks, the capacity that different 

banks have to do the implementation. I think you're 

going to get a comprehensive set of comments from the 

industry. And I will say even as we were on this 

meeting, I have constant calendar invites popping up, 

another working group call on CRA for small slivers.

We are really being very methodical. I 

know that we, along with some others sent in a letter 

earlier in the month asking for your consideration 

for an extension of 30 days so that we could respond 

with great detail and thought. So hopefully we'll 

get a response to that soon.

I know we'll also be spending some time 

in our comment letter talking about the triggers 

that'll create the retail lending assessment area and 

helping you to understand the perspective, especially 

of smaller institutions about whether purely 

numerical trigger, how that works for banks that may 
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not be a household name in a given geographic area. 

And so maybe raising alternative methods for your 

consideration that would supplement just a simple 

loan count. But overall, I just wanted you to know 

we are really -- we understand in the industry the 

momentous nature of this proposal.

It's a big deal, and we want you to get 

it right. We want to get it right because I think 

banks are eager to tell their story on this score. 

So it's more just thank you and hopefully we hear 

back about the due date at some point soon.

MR. MILLER: Thank you, Naomi.

MEMBER CAMPER: Thank you.

MR. MILLER: Appreciate the comments. We 

now have a host of hands. So I'm just going to go 

down the list. Jonathan Mintz?

MEMBER MINTZ: I have a complaint, two 

comments, and a question. The complaint is about 

Shannon that everybody says such wonderful things 

about. But let me just say I tried to arrange for a 

marching band to march through the halls of the FDIC 
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to underscore Naomi's point about what a momentous 

moment this is, and Shannon point blank refused. So 

I'm just registering that complaint. The two 

comments, I think that obviously we're super focused 

on the --

ACTING CHAIRMAN GRUENBERG: Jonathan, I 

was unaware of that, by the way.

(Simultaneous speaking.)

MEMBER MINTZ: This is a management 

issue. There's no question. Obviously, we're super 

focused in the BankOn world on the proposed new retail 

services and products test. And I just want to say 

two quick things about that.

One is that one of the reasons that we 

think -- not just that we love it but that we think 

it makes so much sense is it really dovetails with 

all of our research on the financial empowerment 

counseling side of our house which has shown the 

connectivity between having a safe bank account, 

having a mainstream bank or credit union account, and 

being able to more successfully save money and 
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improve credit scores. So I really just want to make 

the point that for those in our industry it doesn't 

feel like -- what's the expression, like a sore thumb 

or an extra thumb or something. It feels very much 

to be building on what people need in order to be 

homeowners. So we're very excited about that.

The second thing I wanted to say real 

quickly is as you all know, the federal reserve bank 

of St. Louis has the BankOn national data hub. And 

I'm hoping that there are ways that the data that is 

apples to apples to apples collected currently, for 

example, in the BankOn world might be a useful 

mechanism for examiners in being able to help banks 

and credit unions show their stuff in regard to 

answering that 15 percent part of the proposed test. 

The last question I had was super quick which was, is 

there a part of this that you see that particularly 

emphasizes or rewards or gives credit to the ability 

to open new accounts online?

Because I know we've been thinking about 

expanding our approach to assessment areas in this. 
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And I think that online account opening for new 

customers is a particularly strong feature in that 

regard. And I'm just wondering if you see that 

somewhere in the existing proposal. Sorry, Shannon.

MR. MILLER: Do the panelists want to 

address that?

MS. SINGLETON: Let's see. I mean, we're 

sort of looking at the retail services test, we're 

looking at the distribution of the bank's digital and 

other systems. So I don't think it's specific.

But the third component of that test 

would apply to banks that have over 10 billion in 

assets. And delivery systems, they're (audio 

interference) online banking but also telephone 

banking and bank by mail and bank at work programs. 

So consider that under that prong.

But there's nothing sort of specifically 

as I recall in the (audio interference) in the 

preamble that discusses that. But that's something 

that we could obviously include. If it were included, 

it would be under the evaluation of the bank's digital 
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and other divisions prong.

MR. MILLER: Thank you.

MS. SINGLETON: I think that's important 

and that's something that we can consider as we move 

(audio interference) comment.

MR. MILLER: Right. There's a general 

standard that any --

MS. SINGLETON: Yeah.

MR. MILLER: -- service -- product or 

service that's particularly responsive to low and 

moderate income consumers would get special 

consideration. And I think opening accounts 

digitally might make that --

(Simultaneous speaking)

MR. SCHWARTZ: I'm sorry, Jonathan. Just 

three seconds just to add that we're going to be 

coming up with a list of qualified activities, first 

of all. And second of all, the banks will be able to 

write to us and ask if certain activities are covered. 

So I think between those two, there's a good chance 

that those activities will be covered.
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MR. MILLER: Thank you. Tom Foley, you 

had a question?

MEMBER FOLEY: Please and thank you. 

Really appreciate the opportunity and how much 

thoughtfulness and hard work has gone into this. 

We're really excited about potential changes. So two 

questions, one is credit for financial literacy 

activities regardless of income level. I was 

wondering if you could share some more of the thinking 

behind that.

And then also from the housing 

perspective, so National Disability Institute, we do 

obviously a lot of work around disability. And about 

the only thing more hard to come by than affordable 

housing is accessible housing. And I'm wondering if 

it captures the need for accessible housing as well.

MS. FREEMAN: So I can address the 

thinking behind the financial literacy and not having 

to require income levels to track that is that we 

heard from a lot of banks that it was difficult 

sometimes when they did these financial literacy 
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outreach to actually obtain the income of the people 

that were attending. And we do feel like financial 

literacy is important across the board. So that was 

the thinking behind that.

MR. MILLER: Anybody want to address the 

other question?

MS. SINGLETON: I don't recall, again, 

something specific about accessible housing, but 

place that in your comment letter. Does anyone else 

recall --

(Simultaneous speaking.)

MS. FREEMAN: I don't believe so.

MS. SINGLETON: -- housing? Yeah, I 

don't recall that being in the preamble or in the 

rule.

MEMBER FOLEY: Appreciate that. Thank 

you.

MR. MILLER: Steve Antonakes?

MEMBER ANTONAKES: Hey, Jonathan. How 

are you?

MR. MILLER: Good, Steve.
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MEMBER ANTONAKES: Good to see you.

MR. MILLER: Nice to see you.

MEMBER ANTONAKES: Good, thank you. Good 

to see you. And certainly I'll add to my colleagues 

my sincere congratulations to you, your staff, OCC, 

and Federal Reserve staff. Really a comprehensive 

effort at updating these regulations and really a 

tremendous effort.

It's personally exciting for me having 

cut my teeth as a regulator as a CRA examiner two 

regulatory regimes ago. So it's really exciting in 

many respects. I had a couple questions primarily 

relative to the thresholds.

You maintain the large bank, 

intermediate, and small bank distinction here, large 

bank at 2 billion dollars in assets. And I guess my, 

like, reaction there is, boy, the swath between 2 

billion and 2 trillion is pretty significant. Was 

there any thought to, like, a really large bank or a 

megabank standard for banks 100 billion dollars in 

assets or greater, for example, 250, wherever you 
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draw the line?

And then the only other thing on 

thresholds I wanted to point out or just get feedback 

on was on the enhanced data collection requirements 

at 10 billion dollars in assets. So this doesn't 

really impact my bank anymore because we're bigger 

than this. But when we cross that 10 billion dollar 

threshold, it's an expensive proposition between 

Durbin enhanced supervision, things of that nature.

And I always worry that when you put an 

asset figure in a law or regulation, it becomes less 

relevant over time. And I would argue the 10 billion 

dollar threshold compared to when Dodd-Frank was 

signed is very different today than it was 12 years 

ago. So any concern about unintended consequences of 

those data collection provisions taking in at 10 

billion in terms of increased cost leading to further 

consolidation, things along those lines? Just 

something I just would hope you'd be mindful of.

MR. MILLER: So thank you for the 

comments, Steve. And of course, any comments you 
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want to submit in writing will be under 

consideration. So the threshold discussions really 

went to the balance that we're trying to achieve 

between the increased efforts that would be required 

to collect and report data and the benefits we saw 

from having that data and collecting it.

And every time you draw these kinds of 

lines, there are other places you could plausibly 

draw them. But we picked a place where we thought 

considering the size of the banks, the assets covered 

and so forth that we thought made sense. And of 

course, we'd consider anything that -- any other 

proposals that come in on the comments. Thank you.

MEMBER ANTONAKES: Thank you.

MR. MILLER: Margaret, you have your hand 

up?

MEMBER LIBBY: Yes, thank you, Jonathan. 

And yeah, so I will try to be quick because I know 

we're getting close I guess to the end of this 

section. But I was thinking about the presentation 

earlier and just the way as we talk to our young 
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people about the history of the financial services 

sector, we talk about redlining. And really the 

original CRA was in response to that. And so I want 

to echo the comments that a few speakers have made 

around just how big this moment is and this 

opportunity and just appreciate all of the thought 

and work that's gone into it to date.

And I know one of the things that our 

young people have been interested in and this will be 

in our letter is around the retail services piece and 

the openness to including non-custodial accounts for 

young people who fit in certain subcategories there, 

and then also around the credit access piece and 

looking at sort of small, entry level, safe credit 

builder products that used to be a lot more widely 

available as a safe pathway in or on-ramp in to 

credit. And so just wanted to raise those two things 

as things that I know are on their minds as you think 

about this next iteration. Thank you.

MR. MILLER: Thank you, Margaret. I 

think probably somebody can say something about the 
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credit builder products. Patience, is that your 

bailiwick, or --

MS. SINGLETON: I mean, yeah, obviously, 

I mean, credit building products currently under the 

CRA would be considered under the services test. So 

yeah, I think that with this, obviously, we just place 

more of an emphasis (audio interference) quantitative 

and the qualitative aspects of it a bit more. So I 

think builder products have always been or at least 

they should've been in an area where you would be 

able to receive CRA consideration.

And with respect to this NPR, that would 

be (audio interference). I think it's intended to 

receive CRA consideration. If it's not clear, please 

definitely place that in your comment letter and 

we'll consider it. But it's my understanding those 

type of products are covered and CRA eligible.

MR. MILLER: Thank you. Thank you, 

Patience. Thank you for the question, Margaret. I 

think I don't see any other hands, and we're just 

five minutes past time. So let me thank Rick, Pam, 
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and Patience for their presentation. Let me thank 

the members of the committee for their participation. 

And Mr. Chairman, let me turn it over back to you.

ACTING CHAIRMAN GRUENBERG: Well, thank 

you, Jonathan. Before I bring the meeting to a close, 

I think Director Chopra is still on the call. Would 

you want to make a final --

(Simultaneous speaking.)

DIRECTOR CHOPRA: Yeah. No, Marty, thank 

you so much for convening this meeting. And I really 

want to thank all the staff who put a lot of work 

into this and to the members. Let me just follow up 

on the conversation we just had briefly about CRA.

And you know there's going to be a 

process obviously to review all the comments 

carefully to finalize the rule. But I think CRA binds 

chartered banks. But I think it's important that we 

recognize that non-bank financial firms have started 

to receive more public benefits in recent decades, 

especially in the mortgage market.

And we all know about the public programs 
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administered through the VA, the USDA, HUD, and the 

GSEs. And it's worth noting that in 2020 non-bank 

mortgage companies originated over 60 percent of all 

reported mortgages in the country. And given that 

the public in many ways subsidizes mortgage lending 

by these non-banks, I think policymakers across the 

board need to consider ways to ensure that all 

mortgage lenders are serving all qualified 

applicants, especially in neighborhoods that have 

been historically excluded.

And we see that state policymakers are 

already moving in this direction, in Illinois, in 

Massachusetts, in New York. They all have laws now 

obligating both banks and non-banks to meet state CRA 

requirements in the mortgage market. And if we 

believe that public benefits to banks and non-banks 

in the mortgage market are becoming more similar, it 

really seems reasonable to me to ensure that the 

public obligations are also similar.

So again, really excited about all the 

work that is being done on the CRA. I especially 
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want to note the comments about the impact it may 

have on rural areas which I think is an important 

piece of this. I also just generally want to comment 

on the overall conversation, whether it's about 

appraisal bias, other issues.

One of the things I asked the staff at 

the CFPB a lot is when we talk about economic 

inclusion, we often talk about the word, 

creditworthy. And often creditworthy leads people to 

believe something about a person's character about 

individuals, about whether they're a good person or 

not. I think sometimes we don't always -- we think 

a lot about whether people are worthy of credit.

But we also need to think, is credit 

worthy of the people that they're serving? Is it set 

up in ways that give people confidence, meaningful 

protection, accountability when things go wrong, the 

ability to get help? We are obviously very interested 

in economic inclusion and products that don't set 

people up to fail, that help people get ahead, and 

that's going to be a core focus.
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And we really value the input from this 

committee on all of that. So Mr. Chairman, I want to 

thank you for allowing me and the deputy director to 

participate. And again, thanks to the staff and all 

the members for the discussion today.

ACTING CHAIRMAN GRUENBERG: Well, thank 

you, Rohit. Thank you for taking the time. And I 

want to thank Comptroller Hsu as well for 

participating in today's meeting.

I'd like to thank all of the members of 

our committee for their thoughtful participation. 

There's no meeting that the FDIC holds that I look 

forward to or enjoy more if I may be candid about it 

than the meetings of this committee. So thank you 

very much for your willingness to share your time and 

your thoughts with us.

I'd like to thank our staff who really 

did a terrific job today in putting together an 

enlightening program across the board and also 

participated on the panels. And I also want to thank 

the outside panelists who really contributed greatly 
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I think to the conversation today. Let me conclude 

by just reminding everyone that our next meeting is 

going to be on October 27th.

And our intention is to have that meeting 

in person. So we very much look forward to seeing 

you all, talking to you all, and hopefully 

structuring the meeting that we can really make full 

benefit of your input and structure it in a way to 

encourage as much interaction as possible. And I'd 

simply note that at that October meeting, we will 

release the FDIC's latest household survey on who's 

unbanked and underbanked in the United States.

So I think it'll be a very interesting 

meeting that we can all look forward to. So with 

that, let me bring the meeting to a close. We're 

actually on schedule, on time.

Liz, thank you very much for your very 

skilled leadership of the agenda today. And take 

care, and we'll see you all next time. Thanks a lot.

(Whereupon, the above-entitled matter 

went off the record at 4:55 p.m.)
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