Quibi Is Exploring a Sale: Live Updates
The Federal Reserve on Monday released a preliminary sketch of its plan to overhaul how regulators approach the Community Reinvestment Act, which requires banks to invest in poor communities and lend to low-income individuals in the areas where they do business.
The proposal comes after the Fed refused to sign onto an overhaul that another financial regulator, the Office of the Comptroller of the Currency, approved in May.
President Trump’s former comptroller, Joseph Otting, made overhauling how the 1977 law is applied a priority of his time in government. Just before leaving the agency, Mr. Otting, a one-time banker who had experienced personal run-ins with C.R.A. rules, released a final rule that would streamline it, but he failed to garner support from either the Fed or the Federal Deposit Insurance Corporation.
Critics blasted the O.C.C. plan, saying that it had been rushed and that it might allow banks to meet requirements without catering to community needs. The F.D.I.C., which had initially signed onto the proposal, dropped off for the final version. Even banking groups were concerned about the inconsistency across agencies.
There was broad agreement that the approach to bank examination needed a refresh to satisfy the law’s intent in an era of mobile banking, but the Fed differed with the O.C.C. on the details. Lael Brainard, a Fed governor, and central bank staff members had been examining the law themselves and, with the approval of the Fed chair, Jerome H. Powell, drafted their own proposal, which the central bank unveiled on Monday.
The Fed’s suggestion takes a more piece-by-piece approach to applying the Community Reinvestment Act. It would clarify metrics that would be used to oversee lending, tailored to community conditions and based on existing data, while taking a qualitative approach on activities that are hard to boil down to numbers, like retail services. It is now open to a 120-day comment period.
Randal K. Quarles, the Fed’s vice chair for supervision, signed off on the proposal, noting that it “seeks feedback on several approaches designed to make the rules clearer, more transparent, and less subjective.”
He said he hoped the preliminary effort “will be an important step toward achieving consistency across the three banking agencies.”
Article source: https://www.nytimes.com/live/2020/09/21/business/stock-market-today-coronavirus