PCRG’s Executive Director, Ernie Hogan, travelled to Washington this month as part of an NCRC board delegation. This group of met with Federal Reserve Chairman, Jerome H. Powell and Federal Reserve Board Governor, Randal K. Quarles, Vice Chairman for Supervision. During this meeting, PCRG spoke of the importance of expanding assessment areas in the cases of non-traditional banks and fintechs, as these institutions grow in size and lending capacity in local markets. PCRG also noted the important of “brick & mortar” branches. Pennsylvania has seen a disturbingly high level of consolidation and closures of branch offices in the last few years. PCRG also cited Federal Reserve Board Governor Lael Brainard’s speech “Keeping Community at the Heart of Community Development” at the Association of Neighborhood and Housing Development’s Eighth Annual Community Development Conference – Build. Community. Power. in New York City. Brainard was quoted as saying:
“That one powerful insight–the importance of investment in communities–lies at the heart of the Community Reinvestment Act (CRA). The CRA is one of the principal tools the Congress has provided for improving investment and development in lower-income communities. Implementing this law effectively is one of the important responsibilities of the banking agencies in promoting strong outcomes locally that reverberate nationally.”
Keeping this in mind, it is clear that it is essential to update assessment areas to reflect the current digital age – we must include non-traditional lending institutions and technological advances when evaluating CRA activities. Regulators should be given broader assessment reach to ensure accurate reporting. On the other side of the coin, we must not lose focus on physical place and the branch system. Branches are still crucial aspect of bank lending, investments, and financial services.
In this modern era, technology makes banking possible for every strata of society. The relative ease of access and affordability of technology provides unparalled access to banking and its benefits. In Pittsburgh, for example, there are a number of national banks providing services to our local markets, delivering mortgage lending and other key services, and capturing up to 10% of the market – with no obligation to reinvesting in our communities under the CRA. It is our hope, as the Federal Reserve seeks comment on the CRA, that they will strongly consider the recommendations put forth by PCRG, as well as those comments submitted from the entirety of the community development and banking sectors.
Fintechs - computer programs and other technology used to support or enable banking and financial services.