The Federal Reserve's former top regulator has a new job within the central bank: overseeing community development.
In a Thursday afternoon speech, Fed Gov. Michael Barr — who, up until February served as vice chair for supervision — said he is now the point person on the Board of Governors for consumer and community development. He noted that the two roles overlap in key ways.
"The Fed staff who work on community development also work closely with the supervisors overseeing bank compliance with the Community Reinvestment Act," Barr said. "By ensuring that these two functions are working together, we can support financial institutions' awareness of promising opportunities to meet their obligations under the CRA."
In remarks delivered during a policy summit held at the Federal Reserve Bank of Cleveland, Barr said the Fed's community development functions also serve as an "early warning system" for threats to the financial system, a node for data collection to support research and a way to inform monetary policymaking.
Under the CRA, a civil rights era law aimed at countering redlining and other discriminatory lending practices, banks are required to invest in the areas immediately surrounding their bank branches. Barr said the statute requires the Fed to ensure banks are not only engaging with their communities, but doing so in a safe and sound manner.
"Our community development work reinforces the benefits of this effort," he said. "More broadly, community development work helps the Fed support a strong and healthy economy."
As vice chair for supervision, Barr oversaw the
Earlier this year, the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. all
Barr did not address the CRA reform or its subsequent rollback during his speech, but he noted that the act itself remains a pillar for both the U.S. economy and the Fed's two primary mandates: keeping prices stable and maximizing employment.
"Businesses need access to credit to expand and hire, and in many communities that credit depends on the CRA, community development financial institutions and a range of other public policies," he said. "Businesses need qualified workers, and in many places that depends on workforce development that is supported by community development organizations. These conditions are fundamental to achieving the Federal Reserve's goals that Congress has established."
During his remarks, Barr also weighed in on economic conditions and the Fed's monetary policy stance. He said the economy is on solid footing, with unemployment low and inflation moving toward the Fed's 2% target. Even so, he said, he would like to see further progress on price stabilization.
"Low-income households can ill afford increases in prices, and that's why it is so important that we bring inflation back down to our target," he said.
Barr added that he expects higher tariffs to cause prices to tick up this year. In light of that, he favors keeping the Fed's benchmark interest rate unchanged until there is more certainty about the path for inflation and the broader economy.
"There is still considerable uncertainty about tariff policies and their effects," he said. "Monetary policy is well positioned to allow us to wait and see how economic conditions unfold."
