Michael S Barr: Brief remarks - National Community Reinvestment
Coalition Just Economy Conference
Brief remarks (via pre-recorded video) by Mr Michael S Barr, Vice Chair for Supervision
of the Board of Governors of the Federal Reserve System, at the National Community
Reinvestment Coalition Just Economy Conference, Washington DC, 29 March 2023.
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Good morning. Thank you to the National Community Reinvestment Coalition (NCRC)
for the invitation to speak with you today. I regret that I cannot be there in person, but I
can imagine the energy and excitement in a room full of so many dedicated community
development professionals. I appreciate all the work that NCRC members and partner
organizations do to advance economic opportunities for people and communities
throughout the country, and the role you play in helping to inform public policy. For
these brief remarks, I was asked to share my thoughts on the Community Reinvestment
Act (CRA), a topic of great interest to all of you and to me as well.
As you are well aware, the Federal Reserve is working in partnership with the Office of
the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation
(FDIC) to release a final rule for the CRA. The CRA is one of the seminal laws enacted
to address systemic inequities in access to credit and one of the best tools that we, as
regulators, have to help ensure banks meet their affirmative obligation to serve the
credit needs of the communities in which they do business, including low- and
moderate-income communities.
CRA has been an area of focus for me for over 25 years. As many of you know, I have
had the opportunity to research and write about the CRA and its impact long before
joining the Federal Reserve Board. Therefore, I was pleased to be asked by Chair
Powell to lead the Fed's efforts, taking the baton from Vice Chair Brainard, as the
agencies work together to finalize much-needed updates to the CRA.
The three agencies have been inclusive and analytical in their approach to CRA reform.
Extensive stakeholder engagement and policy deliberations directly informed our
proposal last year. What I will lay out as priorities for CRA reform align with the priorities
you have heard previously from the Federal Reserve, OCC, and FDIC.
First, a successful reform of CRA must advance the core purpose of the statute. The
law was intended to address inequities in access to credit and promote community
engagement and financial inclusion in low- and moderate-income communities.
Second, the new CRA rule should address the significant changes in the banking sector
since the regulations were last substantially revised more than a quarter century ago.
This involves evaluation of online and mobile banking, branchless banking, and hybrid
models.
Third, the new CRA rule should provide greater clarity, consistency, and transparency
so that everyone-the public, community groups, and banks-understands what counts for
CRA consideration and how a bank's rating is determined. As you saw in the proposal,
the agencies are working to develop a metrics-based approach to CRA evaluations for
retail lending and community development financing to bring greater clarity and
consistency to CRA examinations, while still ensuring that there is an opportunity to
consider qualitative factors to encourage activities that are particularly impactful or
responsive.
And fourth, the new CRA rule should align evaluations and data collection to bank size
and type. One of the strengths of the banking sector is its diversity of institutions, so a
modern CRA must accommodate banks of different sizes and business models and
ensure that smaller banks do not have the same requirements as large banks with
much greater capacity.
I know that many of you are eagerly awaiting the new CRA rule. Let me assure you that
all three agencies are diligently working together to craft a final rule in light of the
extensive public comments we received on our proposal. Once finalized, it is my hope
and belief that this new CRA final rule will support more impactful bank lending,
investing, and services in today's banking environment for the communities you
faithfully serve.
I hope you have an excellent conference, and I look forward to interacting with many of
you in person so I can learn from you what works to create economic opportunities for
families and communities.