WASHINGTON — Federal Reserve Chair Jerome Powell reaffirmed his agency’s stance on efforts to modernize the Community Reinvestment Act and backed up Fed Gov. Lael Brainard’s rebuke of the proposal put forward by two other regulators.
In a Jan. 8 speech, Brainard
“Governor Brainard has led our oversight committee over these activities for many years, and I asked her to take the lead on CRA modernization, which is a high priority for us,” Powell said during a press conference Wednesday. “I was comfortable with her speech and I'm comfortable with the work we've done, and as I said, we haven't chosen to bring a proposal forward.”
At the press conference, which coincides with the meeting of the Federal Open Market Committee, Powell also sided with recent comments by Fed Vice Chair Randal Quarles suggesting the agency may apply its rulemaking philosophy of tailoring rules for bank complexity to its supervision process as well. He also discussed efforts by central banks to combat climate change.
On CRA, the Fed has not made any decision as to whether it might issue its own proposal, Powell said. He added that the focus has been on trying to come to an agreement with the OCC, which has led the effort to revamp CRA.
“We think that an interagency final rule together would be the best outcome,” said Powell. “We're sorry we haven't been able to get there, and we still hold out some hope that we will be able to.”
Powell opined on a speech Quarles gave earlier this month, in which he outlined a comprehensive set of ideas to
Powell said Quarles is correct that the Fed's Large Institution Supervision Coordinating Committee should correspond with oversight of only the largest and most complex banks.
“I do agree with the principles that he articulated of firm and fair supervision and effective transparency and communications,” he said. “I also think it's a good thing that we would have brighter lines to define our LISCC supervisory portfolio, which we hadn't really had to date,” he said.
Still, while Quarles’ recommendations are “interesting,” Powell, said, they would need further development and periods of public comment before they could be put into place.
Quarles was also asked to comment on the Fed’s responsibility for fighting adverse effects climate change. Sen. Elizabeth Warren, D-Mass.,
“I think the public has every right to expect and will expect that we will assure that the financial system is resilient and robust against the risks for climate change,” he said.
He also added that the Fed “probably will at some point” join the Network for Greening the Financial System, a group of 42 central banks around the world that was launched in 2017 to encourage sustainable development and manage climate change risks. He mentioned that the Fed has attended all of the group’s meetings to date.