The Washington Post, January 28, 2020: Trump’s deregulation push takes a new aim. A Fed board member is pushing back.
The Trump administration’s deregulation push has reached the critical area of low-income housing, community development and financial services. Fortunately, a key member of the Federal Reserve’s board of governors has decided to push back.
At issue is the 1977 Community Reinvestment Act (CRA), which is intended to ensure that equal access to homes includes equal access to mortgages and other loans free of racial redlining. Its central policy concept was that banks should lend back into the same communities where they collect deposits. Regulators take banks’ CRA compliance into account when deciding whether to allow banks to merge or expand.
On Jan. 9, the administration published a proposal to “modernize” the CRA’s implementing regulations, essentially by expanding the list of financial activities that qualify as supporting low- and moderate-income (LMI) communities and loosening geographic definitions of those areas. The risk is that this approach would further weaken the already modest bargaining power LMI communities gain from the CRA.
