Powell unsure on future CRA path if Fed parts with other agencies
WASHINGTON — Federal Reserve Chair Jerome Powell said he still hopes his agency can get on board with the Office of the Comptroller of the Currency on a plan to reform the Community Reinvestment Act, but he is unsure on the path forward if their disagreement persists.
The OCC is widely expected to release a CRA proposal this week along with the Federal Deposit Insurance Corp., but the Fed will likely not sign on to the proposed draft. The divide reportedly stems from differing approaches to measuring CRA investments. The FDIC will vote on the proposal at its board meeting Thursday.
At his recurring press conference Wednesday, Powell echoed earlier comments by Fed Vice Chairman Randal Quarles that the current disagreement over the proposal does not preclude all three agencies from coming together on a final reform plan.
"We worked very hard to try to get aligned with the OCC ... and my hope is that we can still do that," Powell said following a meeting of the Federal Open Market Committee. "I don’t know whether that will be possible or not. We’ll just have to see."
If the agencies can’t meet that objective, the future CRA regime is less clear, said Powell.
“If we can’t [reach agreement] I’m not sure what the path forward would be, but we would certainly not want to create confusion or a sort of tension between the regimes if they do turn out to be slightly different regimes,” he said. “So that’s something I hope we don’t have to face, but we will if we have to."
He said the central bank has always been committed to the goal of modernizing CRA policy.
“We know the CRA is a very important law and we’re strongly committed to the mission of ensuring that banks provide credit through their communities, particularly addressing the needs of low- and moderate-income households and neighborhoods. We also think it’s time for modernization,” he said. “We’ve thought that for some time.”
Quarles told the House Financial Services Committee last week that the issuance of a CRA proposal is only a preliminary step.
"We are only at the point of whether a notice of proposed rulemaking will go out," Quarles said. "We are not at the point of a final rule. And the objective ought to be that at the end all three agencies will join in a final rule."