lael brainard : modernizing and strengthening cra regulations hearing from community banks speech ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at the virtual independent community bankers of america fall leadership meeting, 1 october 2020. * * * thank you for inviting me here today to take part in your fall leadership meeting. 1 we recognize that community banks play a vital role in the communities you serve. your insights into local conditions and your long - standing customer relationships afford you a deep understanding of the needs and characteristics of the households and small businesses in your communities, and enable you to meet their credit needs effectively. the value of these relationships has never been more evident than during this crisis — a fact that my colleague, governor michelle bowman, highlighted yesterday when she said “ it is no surprise that community banks are standing shoulder to shoulder with their customers, on the front lines. ” governor bowman referred to an independent community bankers of america ( icba ) report that cites preliminary data on the paycheck protection program that community banks have been the main source of lending for minority - owned small businesses during the pandemic and noted the same is true for veteran - owned businesses. 2 as you know, last week, the federal reserve board unanimously voted to approve an advance 3 the notice of proposed rulemaking ( anpr ) on the community reinvestment act ( cra ). anpr is built on ideas advanced by stakeholders. throughout this process, the icba has been an important source of information, which has provided the federal reserve valuable insights into the unique role and needs of community banks as you invest in your communities. we have benefited from the icba ’ s engagement on cra both in the form of detailed comment letters and through a number of meetings to discuss different aspects of cra reform. we thank you for your robust engagement and trust that you see your input reflected in the anpr. throughout our outreach, we consistently heard from both bankers and community groups that they value the cra and that they want to see it improved and updated. this was important feedback as we contemplated how to modernize the regulations, while still staying true to the core purpose of the statute to meet the broad range of banking needs in low - and moderateincome ( lmi ) communities and address inequities in credit access. our first major goal for the anpr was to strengthen the regulations in alignment with the cra statute. this

g., serving on a board of a civic institution ) that may not have a primary purpose of community development. in rural areas, bank participation in these kinds of activities can make a difference in supporting economic development. the anpr also seeks feedback on providing cra credit for bank volunteer activities in rural areas that do not involve the provision of financial or related services but have a clear community development purpose and greatly impact local communities, like helping to build affordable housing. our final major goal of the anpr is to provide a foundation for the agencies to converge on a consistent approach that has broad support among stakeholders. stakeholders such as the icba have expressed strong support for the agencies to work together to modernize cra. by reflecting stakeholder views and providing an appropriately long period for public comment, we hope the anpr advances the goal of building a foundation for the banking agencies to converge on a consistent approach that has the broad support of stakeholders. all three regulators have benefited from stakeholder input provided through comment letters, roundtables, and meetings. there is significant interagency agreement on the objectives of cra reform, and many of the ideas in the anpr reflect interagency discussions and regulatory proposals. in closing, we look forward to modernizing the cra in a way that strengthens the regulations to advance the core purposes of the statute, while providing greater certainty, tailoring regulations, and minimizing burden. we have appreciated the icba ’ s strong engagement throughout this process, and we look forward to your continued engagement as we seek to converge on a consistent approach that has broad stakeholder support. thank you. 1 i am grateful to amanda roberts, nancy riley, and joseph firschein of the federal reserve board for their assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. return to text 2 see independent community bankers of america, “ data show community banks lead economic recovery, ” news release, august 19, 2020. also see, michelle w. bowman, “ community banks rise to the challenge ” ( speech at the “ community banking in the 21st century ” research conference, st. louis, mo, september 30, 2020 ). return to text 3 see federal reserve board, “ advance notice of proposed rulemaking : the community reinvestment act ( pdf ), ” ( september 21, 2020 ). return to text 2 / 2 bis central bankers'speeches