Michael S Barr: Serving Indian Country with the modernized
Community Reinvestment Act
Speech (virtual) by Mr Michael S Barr, Vice Chair for Supervision of the Board of
Governors of the Federal Reserve System, at the modernized Community
Reinvestment Act and Indian Country, the Federal Reserve Bank of Minneapolis,
Minneapolis, Minnesota, 28 November 2023.
* * *
Good afternoon. I'm grateful for the opportunity to join you today as we discuss the
updated Community Reinvestment Act regulations and what they mean for Indian
Country.
The Community Reinvestment Act-or CRA-requires banking regulators to encourage
federally insured banks to help meet the credit needs of the communities in which they
do business, including low- and moderate-income neighborhoods. On October 24, the
Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the
Office of the Comptroller of the Currency (OCC) announced a final rule strengthening
and modernizing the regulations implementing the CRA. This historic update reflects
years of public engagement and several rounds of rulemaking by the Board, FDIC, and
OCC. During this process, the Center for Indian Country Development was a key
partner in encouraging input from Native community members and organizations. Indian
Country leaders described critical community needs, such as developing partnerships
with financial institutions, increasing mortgage lending, and bolstering partnerships with
Native Community Development Financial Institutions (CDFIs) to expand small
business lending. I want to thank you for sharing your perspectives. They informed the
final rule in ways that have the potential to positively impact community development in
Indian Country for generations to come.
As the Federal Reserve's Vice Chair for Supervision, I oversee supervision of banks
and bank holding companies. I've researched and written about the CRA's role in
expanding access to credit and financial inclusion for many years and have had the
privilege of working with dedicated colleagues across the Federal Reserve, FDIC, and
OCC who worked tirelessly on this update. It's profoundly rewarding to have completed
this historic milestone, and yet I know our work has just begun. We now need to turn
our attention to building awareness of the opportunities introduced by the new
regulations, and to supporting their clear and consistent implementation.
The potential impact of the new rule was reinforced for me on a recent visit with tribal
nations in Montana. In August, I had the opportunity to spend time on the Flathead and
Blackfeet reservations, where I met with members of the Confederated Salish and
Kootenai Tribes and Blackfeet Nation. Tribal members described the need to address
persistent housing challenges and insufficient access to credit in their communities.
While there is a range of housing experiences across Indian Country, many
communities face an inadequate housing supply, substandard housing conditions, and
limited access to credit for home purchases and improvements. Research from the
Center for Indian Country Development has found that Native Americans pay more for
home loans than White borrowers on average, and the gap widens for Native American
1
borrowers living on reservations. In a community roundtable, tribal members of diverse
ages and income levels shared their personal stories of struggling to find affordable
housing and secure the financing they need.
My conversations with bankers and community leaders raised hopeful avenues for
addressing these challenges. In a roundtable with community banks, lenders described
efforts to expand capital and financial services in Indian Country. Banks are also
building their capacity to leverage federal housing resources and navigate the
complexities of trust land, but these efforts are time-consuming. These lenders see an
opportunity to simplify the administrative complexity of federal housing programs on
tribal lands. Native CDFIs may also offer innovative ways to address housing and other
2
credit needs in Indian Country. These culturally centered community institutions are
finding new ways to support positive credit outcomes and loan performance, and to
facilitate mortgage loans in Indian Country.
The modernized CRA regulation includes important updates that can benefit Indian
Country by encouraging affordable housing and expanding access to credit, investment,
and banking services in Native Land Areas. I'm grateful for the work that the Center for
Indian Country Development, our fellow regulatory agencies, and organizations serving
Indian Country are doing to help communities understand the new provisions. The new
rule reflects changes to the current CRA framework intended to clarify and recognize
community development activities in Native communities. I'm hopeful about the new
opportunities these updates open, and I'll highlight a few of those key changes today.
One major change is that the updated rule newly defines "Native Land Area" and
eligible activities in those areas. In addition, under the new rule, certain investment and
community development activities in these areas are given special consideration. This
important update will recognize banks providing more banking services, community
development financing, and volunteer work in Native communities. Another key change
is that banks can now get credit for qualifying activities that take place outside of their
assessment areas. What this means is that even banks whose assessment areas fall
outside of Native Land Areas can receive CRA credit for activities serving those areas.
The updates related to Native Land Areas provide needed clarity to recognize
investment in Native communities, but there are of course many Native people who live
outside of these areas. The final rule also includes provisions that can be used to
recognize activities benefiting Native individuals and communities outside of designated
Native Land Areas. Community development activities that serve individuals and
communities outside of the Native Land Areas may qualify for CRA consideration under
another community development category. For example, a loan to a nonprofit
organization focused on providing housing to low- or moderate-income urban Native
individuals could qualify as an affordable housing community development activity.
Another example would be loans or investments to facilitate community supportive
services for low- or moderate-income individuals, such as childcare, education,
workforce development and job training programs, health services programs, and
housing services programs.
Another important part of the new rule establishes a community development category
that includes CRA credit for activities undertaken with CDFIs, including Native CDFIs,
which are certified by the Treasury Department. With this update, the final rule provides
clarity that a loan to a Native CDFI-including one serving a Native community outside of
a Native Land Area-would receive positive CRA consideration. We know from research
conducted by the Center for Indian Country Development that Native CDFIs play a key
role in addressing capital and credit needs in Indian Country.
These and other updates to the regulations implementing the CRA open promising new
opportunities for supporting community development activities in Indian Country. One
objective of the final rule is that it provides greater transparency and consistency in
application of the regulations. For example, the new regulations include a list of "impact
and responsiveness review factors" designed to standardize the assessment of a
bank's community development performance. This is an important change that will
guide structured evaluation of banks' community development activities.
Finally, the definition of "Native Land Area" in the final rule, coupled with data collection
and reporting provisions regarding bank community development activities, will support
greater transparency in how Indian Country is served, and provide stakeholders with a
better understanding of the needs and opportunities for community development in
these areas.
In the years to come, we have an important responsibility to monitor and assess how
well the updated CRA regulations meet the needs of Indian Country. In our role as one
of the CRA's regulatory agencies, it will be critical that we continue to listen to and learn
from your experiences. Native CDFIs and other community-based groups will also
continue to play a vital role in these efforts by highlighting where banks should do more
for low- and moderate-income communities.
Thank you again for the opportunity to discuss this landmark CRA update with you. I
look forward to working with you and learning from your experiences in the years to
come as we apply this new framework in service of Indian Country.
1
Helen Banga, Donn Feir, Matthew Gregg, "The Unequal Costs of Native American
Homeownership ," Federal Reserve Bank of Minneapolis, August 3, 2023.
2
Caryn Mohr, " Unpacking the wisdom of Native CDFIs ," Federal Reserve Bank of
Minneapolis, August 29, 2023.