Lael Brainard: Strengthening the CRA to meet the challenges of our time

Speech (via webcast) by Ms Lael Brainard, Member of the Board of Governors of the Federal Reserve System, at the Urban Institute, Washington DC, 21 September 2020.

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

t is a pleasure to be back at the Urban Institute with Sarah Rosen Wartell to discuss the Federal Reserve's efforts to strengthen the Community Reinvestment Act (CRA) regulation. Today the Federal Reserve Board unanimously approved an advance notice of proposed rulemaking (ANPR) that would strengthen, clarify, and tailor the CRA regulation to better meet the law's core purpose.

The CRA's History and Purpose in Relation to Today's Challenges

The CRA was one of several landmark civil rights laws to address systemic inequities in credit access. The CRA was intended to reinforce the other statutes in addressing redlining, wherein banks declined to make loans or extend other financial services in neighborhoods of largely Black and other minority households, in part based on government maps that literally delimited these neighborhoods in red as high credit risks (figure 1). By enacting the CRA, lawmakers aimed to reverse the disinvestment associated with years of government policies and market actions that deprived lower-income and predominantly minority areas of credit and investment.