- Federal Reserve Chairman Jerome Powell gives remarks suggesting that the Community Reinvestment Act should be reformed
- Law requires banks to serve customers of all income levels and was originally established as an anti-discrimination measure
- Modernizing the law would extend it to other institutions offering consumer credit
Summary by Dirk Langeveld
Federal Reserve Chairman Jerome Powell signaled his support for the expansion of a the Community Reinvestment Act, which requires banks to serve customers of all income levels, making it applicable to other institutions offering consumer credit. Powell’s remarks were made before the National Community Reinvestment Coalition.
Powell suggested that the reform would align with the Fed’s role in community development, including investing and expanding credit opportunities in low- or moderate-income communities. Changes to the CRA would have to be made by Congress.
- Powell declared that “like activities should have like regulation”
- The Fed issued a proposal last year to strengthen and modernize the CRA framework “with the objective of building broad support among both external stakeholders and participating agencies” to better meet the credit needs in low- and moderate-income communities
- Fed research finds that minority business owners and workers have been more likely to face challenges during the COVID-19 pandemic
- President Joe Biden supported similar CRA reform on the campaign trail last year, calling for the law to extend to nonbank mortgage and insurance companies
