Federal Reserve Board's Barr links Community Reinvestment Act implementation to public private community investment and supports holding policy rates steady

In a speech at the National Community Investment Conference, Federal Reserve Board Governor Michael S. Barr described how the Community Reinvestment Act (CRA) and the Federal Reserve’s implementation of it encourage banks to support low- and moderate-income communities through public-private partnerships. He also discussed the Federal Open Market Committee’s decision to hold the policy rate steady for a second consecutive meeting, saying rates may need to remain steady for some time while inflation remains notably above the 2 percent goal. Barr outlined how CRA consideration can attach to bank activity that supports community development through mechanisms such as the New Markets Tax Credit (NMTC), low-income housing tax credit (LIHTC), and funding to community development financial institutions (CDFIs). He cited data indicating that each dollar of government investment in the NMTC program generates an average of more than eight dollars in private investment, and noted that LIHTC provides state and local agencies with approximately USD 10.5 billion in annual budget authority to issue tax credits for lower-income rental housing. Examples highlighted included the USD 50 million Sharswood Ridge project in North Philadelphia supported by NMTC and CRA-aligned bank capital, the Dreambuild modular housing initiative financed in part through a for-profit CDFI owned by 12 banks and other organizations, Appalachia Community Capital’s role in supporting regional small business lending with backing from over 25 banks, and the Memphis Medical District Collaborative’s redevelopment efforts anchored by major medical institutions.