Federal Reserve Chairman Jerome Powell said on Tuesday that the Fed wants to keep geography as a factor in banks’ antidiscrimination evaluations, a stance that puts him at odds with other Trump-appointed bank regulators who are seeking to overhaul the rules.
“We’re very much focused on taking into account place and taking into account availability of credit,” said Powell. “We’re open to a lot of different ideas, and I think a lot of the other agencies feel the same way, they need to continue to focus on place.”
The Office of the Comptroller of the Currency, the bank regulatory agency housed within the Treasury, has sought to shift away from geography based-assessments of banks in a rewrite of the Community Reinvestment Act. Congress enacted the landmark anti-discrimination law in the 1970s to combat ‘redlining’, a practice in which banks avoided lending to individuals from impoverished communities, especially minority borrowers.
As more banking and lending moves online, banking regulators weighed an update to the law to accommodate the decrease in banking at physical locations. A bank that receives a poor score under the law can be prohibited by regulators from expanding.
Comptroller of the Currency Joseph Otting, a Trump appointee, has proposed evaluating banks less on the physical location of their branches and more on the services they provide outside their geographical footprints. The proposal has riled up some consumer advocates, and other banking regulators have demurred over whether they support the approach.
“We do think that technology has changed, and the world has changed a lot, and it’s a good time … to step back and look at reforming CRA.” said Powell. “But in a way that enables us to better meet the goals of the statute, not worse. We’re not looking to go in the wrong direction.”
“As part of this reform process we’ll be looking to achieve better [availability of credit] under the law rather than weaker,” Powell added.
