Lael Brainard: Strengthening the Community Reinvestment Act by staying true to its core purpose

Speech by Ms Lael Brainard, Member of the Board of Governors of the Federal Reserve System, at the Urban Institute, Washington DC, 8 January 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning. I am pleased to be here at the Urban Institute to discuss how to strengthen the Community Reinvestment Act (CRA), which is a key priority for the Federal Reserve. The CRA plays a vital role in bringing banks together with community members, small businesses, local officials, and community groups to make investments in their community's future. That is why we are committed to getting CRA reform done right.

The Origins and Purpose of the CRA

Any successful reform must be grounded in the origins of the CRA and its ongoing importance to low- and moderate-income (LMI) neighborhoods. The CRA was one of several landmark pieces of legislation enacted in the wake of the civil rights movement intended to address inequities in the credit markets. By passing the CRA, Congress aimed to reverse the disinvestment associated with years of government policies and market actions that deprived lower-income areas of credit by redlining-using red-inked lines to separate neighborhoods deemed too risky. By conferring an affirmative and continuing obligation on banks to help meet the credit needs in all of the neighborhoods they serve, the CRA has not only prompted banks to be more active lenders in LMI areas, but also important participants in multisector efforts to revitalize communities across the country.