Remarks by Vice Chair for Supervision Barr to the NCRC Just Economy Conference, March 29, 2023 | Summary and Q&A

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March 29, 2023
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Federal Reserve
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Remarks by Vice Chair for Supervision Barr to the NCRC Just Economy Conference, March 29, 2023

TL;DR

The Federal Reserve is working on a final rule for the Community Reinvestment Act (CRA) to address systemic inequities in access to credit and promote financial inclusion in low and moderate-income communities.

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Key Insights

  • 💳 The Federal Reserve recognizes the importance of CRA in promoting economic opportunities and addressing systemic inequities in credit access.
  • 🚗 The reform of CRA should consider changes in the banking sector, including online and mobile banking, to better serve communities.
  • 👶 Clarity, consistency, and transparency are crucial in the new CRA rule to ensure understanding and encourage impactful activities.
  • 👨‍💼 Accommodating banks of different sizes and business models is essential to uphold the diversity of the banking sector.

Transcript

good morning thank you to ncrc for the invitation to speak with you today I regret that I cannot be there in person but I can't 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 peopl... Read More

Questions & Answers

Q: What is the main goal of the Community Reinvestment Act (CRA)?

The CRA was enacted to address inequities in access to credit and promote community engagement and financial inclusion in low and moderate-income communities.

Q: How does the new CRA rule plan to address changes in the banking sector?

The new CRA rule will evaluate online and mobile banking, branchless banking, and hybrid models to ensure the regulations are up-to-date with the evolving banking sector.

Q: What is the importance of clarity, consistency, and transparency in the new CRA rule?

The new CRA rule aims to provide clarity and consistency in what counts for CRA consideration, how a bank's rating is determined, and ensures transparency for the public, community groups, and banks.

Q: How will the new CRA rule accommodate banks of different sizes and business models?

The modern CRA must align evaluations and data collection to bank size and type, recognizing the diversity of institutions in the banking sector to avoid placing the same requirements on smaller banks as larger banks.

Summary & Key Takeaways

  • The Federal Reserve, along with the Comptroller of the Currency and the Federal Deposit Insurance Corporation, is finalizing a much-needed update to the CRA.

  • The reform should advance the core purpose of the statute, address changes in the banking sector, provide greater clarity and consistency, and align evaluations and data collection to bank size and type.

  • Once finalized, the new CRA rule aims to support impactful bank lending, investing, and services for the benefit of the communities they serve.

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