Fed Must Improve, Update CRA for Underserved Communities
In a comment letter to the Federal Reserve, Better Markets commended the agency for its plans to modernize bank rules for underserved communities but said the Fed must commit to some core principles as it develops a new rule.
Why it matters: The CRA is a crucially important piece of legislation designed to ensure that historically underserved communities have access to credit and banking services. But for far too many Americans, the promises of the CRA have remained unfulfilled.
What we said: As we explained in our comment letter, while we are glad to see that the Federal Reserve appears genuinely interested in improving its CRA rules, we set forth a number of important considerations that the Fed must bear in mind as it develops new rules. For example, while the banking industry can be expected to resist any new regulatory costs or burdens, the Federal Reserve must discount those arguments.
For a century, the financial services industry has routinely predicted dire consequences from new rules, yet they fail to materialize, and banks continue to log record profits. Moreover, to the extent new regulatory requirements are necessary, Congress has already decided that such measures are necessary and appropriate to make banking fairly accessible in all communities. As we note in our comment letter, the Federal Reserve must take specific and targeted regulatory action to undo the damage inflicted by centuries of explicit racial discrimination.
Bottom line: The Federal Reserve must do everything in its power to ensure that the CRA’s provisions are implemented and enforced so that vulnerable American’s are not excluded from the many benefits of the financial system, including reducing inequality, building wealth and seizing economic opportunities.
In addition to filing our comment letter, Better Markets joined excellent sign-on letters addressing the Fed’s request for comment, which were led by the National Community Reinvestment Coalition as well as Americans for Financial Reform. Read the NCRC letter and the AFR letter for more information.