blur the lines between banks and nonbanks. for example, we can expect mutual funds to refine their offerings to compete with bank checking and savings accounts, albeit without deposit insurance. banks will undoubtedly make further inroads in mutual fund management and investment banking through internal growth and through acquisitions of securities firms. investment banks may also supplement their services by making commercial loans and participating in loan syndications. with such things happening, why do we need a legislative solution? the answer is that a well thought out proposal addressing the appropriate structure for the industry would allow for a more rapid and efficient integration of financial services. moreover, by clearly defining the boundaries and structure of financial conglomerates, a well - considered supervisory program could adequately protect banks without undue intrusion to other parts of the conglomerate. because financial conglomerates generally operate as integrated entities and manage risks on a global basis across business lines, their true operating structure superimposes a risk management and internal control process that extends across legal - entity - based corporate structures. in this light, supervision by legal entity can create important supervisory gaps that may expose the insured depository institution to unnecessary risk. that is to say, someone should look at the risk management of the organization as an organic whole, rather than as separate pieces that are simply added together. in fact, comprehensive, consolidated supervision by the home country supervisor is a legal requirement for foreign banks operating in the u. s. some foreign supervisors are now beginning to question the consolidated supervision of u. s. firms operating in their countries. now, i suspect some nonbank firms may feel apprehension at having an umbrella supervisor evaluate their operations. but let me emphasize that such oversight need not be overly onerous or intrusive. in fact, regulators are probably better prepared than ever before to implement an umbrella supervisory approach as a result of the supervisory techniques and approaches i just discussed. by applying risk - focused supervision, and promoting sound practices, and improved market disclosures, an umbrella supervisor should be able to implement an effective, unintrusive oversight process for conglomerates. moreover, an umbrella supervisor may be able to provide assurances and information to other regulators and individual supervisors which may minimize their need to extend their reviews beyond the legal supervised entity and into the conglomerate ’ s other operations, creating duplication and burden. i believe that the umbrella supervisor, whether it is the central bank or another agency, should not attempt to duplicate efforts of other regulators. rather, the umbrella supervisor should evaluate the financial

lael brainard : modernising and strengthening cra regulations - a conversation with the chicago community trust speech by ms lael brainard, member of the board of governors of the federal reserve system, at the chicago community trust, chicago, 1 december 2020. * * * good morning. i want to thank dr. helene gayle for inviting me to join this conversation, along with the staff, grantees, and partners of the chicago community trust and president charlie evans of the federal reserve bank of chicago. i appreciate the opportunity to discuss economic inclusion and the community reinvestment act ( cra ) and learn more about the trust ’ s work with its partners in chicago. 1 the effect of covid - 19 has underscored the importance and urgency of your work. this year the chicago community covid - 19 response fund has helped many of the nonprofits and communities hardest hit by the pandemic, and i know you have been thinking critically about doing this work in a way that supports an equitable recovery for black and latinx communities. 2 i commend the trust for your leadership on these principles. the disproportionate effects of the pandemic on low - income and minority households and the importance of an equitable recovery are also a key focus of the federal reserve. while creating hardship for all, the pandemic has inflicted disproportionate economic pain on vulnerable businesses, sectors, and demographic groups, which risks entrenching a k - shaped recovery that is weaker overall. small businesses in consumer - facing sectors, along with many lowincome workers, women workers, and black and hispanic workers, are at a precarious stage of the pandemic. even as we are buoyed by news that effective vaccines may be widely available by next summer, covid case counts are resurgent, and many low - and moderate - income households are facing the exhaustion of unemployment benefits, the depletion of savings from cares act ( coronavirus aid, relief, and economic security act ) programs, and the fear that eviction moratoriums and forbearance for mortgages and student loans will soon end. while the paycheck protection program provided some relief to many small businesses earlier in the year, that sector remains under pressure, and many small businesses in sectors hit hard by virus restrictions are facing dwindling cash buffers. in addition, states and localities are confronting difficult choices as they respond to