CRA is designed to combat discriminatory lending practices against lower-income borrowers — and minorities in particular. Governor Lael Brainard, the Fed board’s point person on the law, stressed that more work needs to be done to address racial disparities, despite a number of landmark civil rights statutes.
“Even with these critical laws, the legacy of discriminatory lending and systemic inequity in credit access remains in evidence today,” Brainard said in a speech to the Urban Institute.
“The typically minority neighborhoods demarcated in red in the old color-coded maps tend to be characterized by worse economic performance and opportunity even today,” she added. “Beyond these specific neighborhoods, research and surveys indicate that there are ongoing racial disparities in access to credit.”
In its proposed approach, the central bank would put greater emphasis on encouraging banks to support minority depository institutions, community development financial institutions, women-owned financial institutions and low-income credit unions.