2020 Speeches
Governor Lael Brainard
Strengthening the Financial System to Meet the Challenge of Climate Change
December 2020
("It is important to LMI communities and other underserved communities to be proactive in working to equitably mitigate the risks of climate change in advance. Reflecting this, the Federal Reserve's recent advance notice of proposed rulemaking on the CRA for the first time seeks feedback on providing CRA credit to encourage loans and investments that promote disaster preparedness and climate resilience. We want to encourage lenders to invest and rebuild in ways that will increase resilience to future climate risks in underserved and local LMI communities.")
Governor Michelle W. Bowman
Technology and the Regulatory Agenda for Community Banking
December 2020
("The adoption of digital banking services can also be essential for historically underserved and disadvantaged communities, assuming they have bank accounts and access to internet-based tools like smartphones. In some cases, fintech can lower costs and improve services, particularly for small businesses or lower-income consumers who are less likely to have access to credit.")
Governor Lael Brainard
Modernizing and Strengthening CRA Regulations: A Conversation with the Chicago Community Trust
December 2020
("The disproportionate effects of the pandemic on low-income and minority households and the importance of an equitable recovery are also a key focus of the Federal Reserve. While creating hardship for all, the pandemic has inflicted disproportionate economic pain on vulnerable businesses, sectors, and demographic groups, which risks entrenching a K-shaped recovery that is weaker overall. Small businesses in consumer-facing sectors, along with many low-income workers, women workers, and Black and Hispanic workers, are at a precarious stage of the pandemic.")
Governor Lael Brainard
Strengthening Diversity and Inclusion in Economics
November 2020
("Economics can also provide powerful answers to questions such as, 'What is the cost of discrimination?' This question was explored extensively by Andrew Brimmer, a child of sharecroppers who earned his PhD in economics at Harvard. Brimmer served with great distinction as the first Black governor of the Federal Reserve Board from 1966 to 1974, where he contributed to decision-making on monetary policy, and went on to publish research on systemic risk in capital markets and the Fed's lender of last resort function. Brimmer estimated that discrimination cost the U.S. economy 3.8 percent of gross domestic product in 1993. In case you are wondering about the cost in today's economy, Dana Peterson, who is the chief economist of the Conference Board and served as a research assistant at the Federal Reserve Board, estimated closing racial gaps could add roughly $5 trillion to the economy over the next five years.
… Diversity and inclusion need to be priorities for every economics department around the country—and for the think tanks, governments, businesses, and many other organizations that train and employ economists. Many of my colleagues in economics and education are working hard to make progress, including by developing programs to support and mentor diverse talent interested in this consequential discipline. We need to make it a national goal to catch up to medicine, science, engineering, and other fields in developing robust programs, conducting ongoing evaluation, and constantly adapting to improve the inclusivity of economics and our ability to recruit and retain diverse talent. We want to be known within the profession as a place where minorities and women are confident they have the opportunity to make an impact and feel they are respected and heard by leadership.")
Governor Lael Brainard
Modernizing and Strengthening CRA Regulations: A Conversation with the National Congress of American Indians
November 2020
("Let me spend a few minutes talking about how CRA reform might help address these systemic economic inequities in Indian Country. Over 45 percent of the American Indian and Alaskan Native population live in low- and moderate-income (LMI) or distressed or underserved census tracts. Yet, feedback from stakeholders like yourselves indicates that many of these locations fall outside of where banks currently serve.
In September, the Federal Reserve Board unanimously voted to approve an Advance Notice of Proposed Rulemaking (ANPR) on the CRA. The ANPR proposes reforming CRA regulations based on ideas advanced by a broad set of stakeholders, including the NCAI. I hope you will continue to engage throughout the rest of this process. It has been 25 years since the banking agencies last substantially reformed CRA, so it is important that we get it done right.
The Board's ANPR seeks to advance the law's core purpose of addressing unequal access to credit for LMI and minority communities and disinvestment in underserved communities. A modernized CRA should improve credit access and the availability of community development financing. This includes strengthening the regulations to ensure that a wide range of banking needs are being met.")
Governor Lael Brainard
Achieving a Broad-Based and Inclusive Recovery
October 2020
("The recovery remains highly uncertain and highly uneven—with certain sectors and groups experiencing substantial hardship. These disparities risk holding back the recovery. The Federal Reserve is committed to providing sustained accommodation to achieve a broad-based recovery. Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery.
… But within the overall improvement, some groups and sectors continue to see depressed employment, income, and revenues. Sustained disparities can hold back the recovery and lead to worse overall outcomes. Over the past month, the Federal Reserve Board has held three meetings with community groups, mission-oriented lenders, and representatives of frontline workers to hear about these disparities and their implications for the recovery …
The COVID-19 pandemic is exacerbating existing disparities in labor market outcomes. Although employment fell sharply for all groups between February and April, the decline was steeper for Black and Hispanic workers than for white and Asian workers, steeper for women than for men, and steeper for non-college-educated workers than for college graduates. At 12.1 percent, the unemployment rate for Black workers is more than 4 percentage points higher than the aggregate. Occupation and industry affiliation can explain only part of these COVID-19 labor market disparities.
In the years before the pandemic, I was encouraged to see prime-age individuals in all demographic groups drawn into the strong labor market, reversing the previous decline in participation and boosting the productive capacity of the economy. Persistent spells out of employment risk harming not only the prospects of these individuals, but also the economy's potential growth rate.")
Governor Lael Brainard
Modernizing and Strengthening CRA Regulations: A Conversation with the Housing Community
October 2020
("During the mortgage foreclosure crisis, many families around the country suffered the devastating loss of their home through no fault of their own, and homeownership rates have not recovered to pre-crisis levels for the affected groups. Now, the COVID-19 pandemic is raising a new set of housing challenges for renters and the rental market. The current crisis is hitting LMI households with limited financial resources the hardest, and this is especially true for Black and Latinx households. Data from the Census Household Pulse Survey indicate that 25 percent of Black renters and 22 percent of Hispanic renters were behind on their rent payments as of September, along with 12 percent of White renters. Among homeowners, Black and Hispanic households have been 'significantly more likely to miss or defer monthly mortgage payments and experience uncertainty about making next month's payment than white households' during the pandemic.
...The CRA is a critical law, enacted along with other complementary federal civil rights laws during the late 1960s and 1970s. The intent of these laws was to address redlining and systemic inequities in access to credit and other financial services for LMI and minority communities. The core purpose of CRA remains as important as ever, especially given the national conversation we are having about racial equity in our society and the disproportionate impact that COVID-19 is having on LMI and minority communities.
Even with these critical laws, the wealth gap remains stubbornly wide. The Survey of Consumer Finances for 2019 found that the typical White family has eight times the wealth of the typical Black family. For many American families, homeownership is the single most important component of their wealth. In 2019, the homeownership rate for Black households was 42.1 percent, as compared to the 73.3 percent for White households. This homeownership gap of 31.2 percent is 3.1 percentage points wider than a decade ago.
The Board's ANPR seeks to advance the law's core purpose of addressing unequal access to credit for LMI and minority communities and disinvestment in underserved communities. A modernized CRA should help move the needle on credit access, wealth building, and the availability of community development financing. This includes strengthening the regulations to ensure that a wide range of low-income and minority banking needs are being met. It also includes promoting financial inclusion by proposing incentives for further bank investments in Minority Depository Institutions, Community Development Financial Institutions (CDFIs), and community development activity in designated areas of need outside of assessment areas, such as Indian Country.")
Vice Chair Richard Clarida
U.S. Economic Outlook, Monetary Policy, and Initiatives to Sustain the Flow of Credit to Households and Firms
October 2020
("In September, the Board published an advance notice of proposed rulemaking (ANPR) that would modernize the Community Reinvestment Act (CRA) by strengthening, clarifying, and tailoring CRA regulations to ensure that they reflect the current banking landscape and better meet the core purpose of the CRA, addressing inequities in credit access and ensuring an inclusive financial services industry. The ANPR proposes special provisions for minority depository institutions (MDIs), women-owned financial institutions, low-income credit unions, and community development financial institutions. Because of feedback received about lack of awareness of existing MDI provisions in the CRA regulations, the Board plans to highlight all MDI special provisions and make the credit they receive more prominent and clear in revised regulation, examination guidance, and other public documentation. In addition, we also propose four specific new MDI provisions. Finally, the CRA also proposes to create incentives for bank investments in geographic areas of need outside of traditional assessment areas.")
Governor Lael Brainard
Modernizing and Strengthening CRA Regulations: A Conversation with Minority Depository Institutions
October 2020
("The Community Reinvestment Act (CRA) is one of the most powerful tools we have for addressing systemic inequities in credit access for minority individuals and communities. Last month, the Federal Reserve Board unanimously voted to approve an Advance Notice of Proposed Rulemaking (ANPR) on the CRA. The ANPR is built on ideas advanced by a broad set of stakeholders, including the NBA and MDIs. It has been 25 years since we last reformed CRA, so it is important that we get it done right.
The CRA is a critical law, enacted along with other complementary federal civil rights laws during the late 1960s and 1970s, to address redlining and systemic inequities in access to credit and other financial services for minority communities that contributed to dramatic differences in economic access and overall financial well-being. Even with these critical laws, the legacy of discriminatory lending and systemic inequity in credit access remains in evidence today.
Advancing the CRA's core purpose includes strengthening the regulations to ensure that a wide range of low-income and minority banking needs are being met. As part of this objective, CRA modernization provides a unique opportunity to carefully examine the MDI provisions in the CRA statute to ensure proposed changes to the regulation maximize the benefit and impact for MDI banks and the customers and communities they serve. In the ANPR, we placed a priority on strengthening the special consideration for MDIs, women-owned financial institutions, and low-income credit unions in the current regulation, as well as adding new proposals based on your feedback.")
Chair Jerome H. Powell
Recent Economic Developments and the Challenges Ahead
October 2020
("The burdens of the downturn have not been evenly shared. The initial job losses fell most heavily on lower-wage workers in service industries facing the public—job categories in which minorities and women are overrepresented. In August, employment of those in the bottom quartile of the wage distribution was still 21 percent below its February level, while it was only 4 percent lower for other workers. Combined with the disproportionate effects of COVID on communities of color, and the overwhelming burden of childcare during quarantine and distance learning, which has fallen mostly on women, the pandemic is further widening divides in wealth and economic mobility.")
Governor Lael Brainard
Navigating Monetary Policy through the Fog of COVID
July 2020
("The pandemic's harm to lives and livelihoods is falling disproportionately on black and Hispanic families. After finally seeing welcome progress narrowing the gaps in labor market outcomes by race and ethnicity in the late stage of the previous recovery, the COVID shock is inflicting a disproportionate share of job losses on African American and Hispanic workers. According to the Current Population Survey, the number of employed persons fell by 14.2 percent from February to June among African Americans and by 13.4 percent among Hispanics—significantly worse than the 10.4 percent decline for the population overall.")
Chair Jerome H. Powell
Introductory Comments
June 2020
("It is not lost on me that we are meeting on Juneteenth amid a renewed reckoning of racial injustice. The pandemic has again exposed a range of troubling inequalities, most of them of long standing. As the national discussion continues, it is critical to remember that equity includes access to education, work, and economic opportunity. I am reminded that Dr. King delivered his 'I Have a Dream' speech, just a few short blocks from the Federal Reserve, at a rally whose full title was the March on Washington for Jobs and Freedom.
We meet today amid the immense hardship and suffering the coronavirus has caused. Lives and livelihoods have been lost, and uncertainty looms large. We are all grateful to our frontline health-care workers who put themselves in harm's way every day and to the essential workers helping us meet our needs. While we are all affected, the burden has fallen disproportionately on those least able to bear it.")
Governor Lael Brainard
Strengthening the Community Reinvestment Act by Staying True to Its Core Purpose
January 2020
("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.
Pursuant to guidance from the Board of Governors, each of our Federal Reserve Banks houses a group of dedicated community development professionals and CRA examiners to help banks meet their CRA obligations. We are proud of our work in familiarizing banks with the CRA's provisions, introducing banks to potential partners in their communities, and convening conferences to disseminate research and best practices.
The CRA plays a vital role in the ecosystem supporting economic opportunity in LMI communities in both rural and urban areas. Rather than direct funds to specific projects, the CRA encourages banks to engage on the priorities identified by local leaders and more broadly serve credit needs of small businesses and residents of these communities. By being inclusive in their lending and investing, banks help their local communities to thrive, which in turn benefits their core business. The recognition of this mutually beneficial relationship between banks and their local communities is one of the core strengths of the CRA and the reason our effort to revise the CRA regulations must focus on local needs and stakeholder input.")