The rules to comply with the Community Reinvestment Act have become "formulaic and ossified" and must be changed to encourage lending practices the law originally intended to foster, the Fed's top regulator said.
The Office of the Comptroller of the Currency has been leading the charge on revamping the Community Reinvestment Act, but a big unknown is whether the other two regulators charged with carrying out the law are committed to moving ahead as swiftly on a reform plan.
The bill, which also exempts community banks from the trading ban named for former Fed Chairman Paul Volcker, would go a step further than the regulatory relief bill that passed the Senate.
In his last major speech as the agency’s No. 2, Thomas Hoenig said it would be a “serious policy mistake” to relax measures such as the supplementary leverage ratio, but he was more open to regulatory relief in other areas.
The Federal Reserve Board's vice chairman for supervision said certain definitions should be more consistent and clearer in order to give regulated entities a better understanding of what to expect when complying with the trading ban.
The Federal Reserve Board's vice chairman for supervision said he did not foresee the agency’s regulatory review as significantly reducing capital levels.
Treasury Secretary Steven Mnuchin said the Financial Stability Oversight Council will propose SIFI criteria before executing changes, and provided comments about the Volcker Rule, Orderly Liquidation Authority and housing finance.
