WASHINGTON — Federal Reserve Chair Jerome Powell indicated his support on Monday for subjecting non-depository institutions to the Community Reinvestment Act, but said the final decision should be left to Congress.
The Fed has been in talks with the other banking agencies for years to reform implementation of the anti-redlining law. The Office of the Comptroller of the Currency issued its own CRA reform rule last year, and the Fed released a reform outline
While the banking regulators can’t expand the scope of CRA without authorization from lawmakers, Powell said Congress may want to consider an expansion of the law as lending continues to move outside of the regulated banking sector.
“You do see this across payments and all sorts of financial services — you see activities that had once been principally the province of banks, moving into the nonbank sector,” he said, speaking at the National Community Reinvestment Coalition’s Just Economy Conference.
“I would just say as a general matter, like activities should have like regulation,” he said. “In terms of … the specific question, that's really one for Congress to make a decision about, but I like to think, though, that consumers require protection and low- and moderate-income communities require credit support, regardless of the nature of the institution.”
Senate Majority Leader Chuck Schumer, D-N.Y., in pre-recorded remarks to conference participants, also expressed interest in expanding the scope of CRA.
“For years, the CRA has been crucial in making sure banks invest in low-income neighborhoods, provide mortgages, loans for small businesses and so many other things,” he said. “As we work to reform, modernize and hopefully expand the CRA, it'll be my number one goal to refocus CRA's priorities to benefit those who truly need help.”
The Fed’s CRA reform outline deviated somewhat from the OCC's rule, which was widely panned by banks and community groups that urged the regulators to come together on a harmonized CRA overhaul.
Powell noted on Monday that the Fed is reopening discussions with the OCC and the Federal Deposit Insurance Corp. on what comprehensive CRA reform should look like at all three agencies.
“We think that the CRA will be most effective if the three agencies get together with a consistent approach, and hopefully with identical or nearly identical rules, so we remain committed to doing that,” he said.
He also said that he didn’t believe the Biden administration’s
“I would say that I believe we can make good progress with the other agencies now and that's certainly going to be our intent,” he said. “We have discussions going on now and I feel that we will make progress.”
