Search Results
Discussion Paper
Tracing the History of Community Development Credit Unions
When the Community Reinvestment Act was passed in the late 1970s, Congress tasked the 12 Federal Reserve Banks with ensuring that supervised financial institutions meet the credit needs of the communities they serve. Community development financial institutions (CDFIs) are mission-driven lenders that help provide credit in underserved areas. As we gather information on CDFIs through the 2025 Federal Reserve CDFI Survey, we want to examine the roots of community development finance and the evolution of CDFIs.This post focuses on the history of one type of CDFI: community development credit ...
Discussion Paper
Taking Stock of Community Development Financial Institutions
Community development financial institutions (CDFIs) are mission-driven organizations that expand financial product and service options to lower-income households, small businesses, and communities. The Community Reinvestment Act of 1977 created the Federal Reserve's community development function, which is tasked with promoting economic growth and financial stability for low- to moderate-income communities. Because CDFIs support access to credit in low- and moderate-income areas, the Federal Reserve has a direct interest in understanding CDFIs' role in capital access and the landscape of the ...
Speech
Ending 'Too Big to Fail' Is Going to Be Hard Work
Ending the treatment of certain firms as “too big to fail” requires addressing two mutually reinforcing issues: first, the expectation that creditors of some financial institutions are protected by implicit government support, should those institutions become troubled; and second, the obligation many policymakers feel to support certain institutions to protect creditors from losses.The current system encourages fragility, which induces interventions.The Dodd-Frank Act attempts to deal with “too big to fail” through the establishment of the Federal Deposit Insurance Corp.’s Orderly ...
Speech
Lacker Testifies on Bankruptcy and Financial Institution Insolvency
Good morning. I am honored to speak to the Subcommittee about the bankruptcy code and financial institution insolvency. In my remarks, I will discuss why I believe it’s so important to improve our bankruptcy code to make it feasible to resolve failing financial firms in bankruptcy. At the outset, I should say that my comments today are my own views and do not necessarily reflect those of the Board of Governors of the Federal Reserve or my colleagues at other Federal Reserve Banks. My views have been informed by both my experience leading the Fifth Federal Reserve District over the last ...
Speech
Ending 'Too Big to Fail' Is Going to Be Hard Work
Ending the treatment of certain firms as “too big to fail” requires addressing two mutually reinforcing issues: first, the expectation that creditors of some financial institutions are protected by implicit government support, should those institutions become troubled; and second, the obligation many policymakers feel to support certain institutions to protect creditors from losses.The current system encourages fragility, which induces interventions.The Dodd-Frank Act attempts to deal with “too big to fail” through the establishment of the Federal Deposit Insurance Corp.’s Orderly ...
Speech
Economics and the Federal Reserve After the Crisis
There are two different ways of thinking about financial stability, representing alternative theories of financial market behavior. The first assumes that market institutions and behavior are fixed and that those fixed characteristics result in a financial system that is prone to instability. The second assumes that market institutions and behavior are adaptable and that financial markets respond to expectations of government support, which can provide undesirable incentives and lead to instability.U.S. financial regulatory policy seems to be largely based on the first theory. However, since ...
Speech
Economic Outlook, October 2011
Thank you for inviting me to speak with you tonight. I will be discussing the economy — both current economic conditions and what the future might hold. Before I begin, I would like to emphasize that these remarks are my own and the views expressed are not necessarily shared by my colleagues on the Federal Open Market Committee (FOMC).1My views about the economy are shaped by the ongoing analysis of national and regional data by staff in the Federal Reserve System, particularly at the Federal Reserve Bank of Richmond. But they are also influenced importantly by the wealth of information ...
Speech
Address to the Oversight and Investigations Subcommittee, Committee on Financial Services
Good afternoon. I'm honored to speak to this Subcommittee about the federal government's financial safety net and how the Dodd Frank Wall Street Reform and Consumer Protection Act seeks to address it.At the outset, I should point out that within the Federal Reserve System the Board of Governors has sole authority to write rules implementing the requirements of the Dodd-Frank Act. Federal Reserve Banks supervise financial institutions under authority delegated to them by the Board of Governors. In keeping with Board of Governors guidance, I will not discuss any current or potential Federal ...
Speech
"Prudential Stress Testing in Theory and Practice: Comments on 'Stressed Out: Macroprudential Principles for Stress Testing'"
I am pleased to have this opportunity to be with you today to discuss stress testing. In the wake of the housing bust and subsequent financial turmoil, the regulation and supervision of financial institutions and markets has been the subject of intense scrutiny. The 2009 U.S. stress tests appeared to play a critical role in the resolution of the crisis, which has led to recommendations that such tests, with appropriate refinements, be made a routine component of the supervisory regime for large financial institutions. Indeed, as the authors note, the Dodd-Frank Act mandates annual stress ...
Speech
Competition in Banking: Achieving the Right Balance
It is a pleasure to be with you this morning. The theme of this session is “How Banks Compete.” I want to develop a variation on this theme and consider how the intensity of competition in banking has increased over the years, and some of the challenges this change presents.In the 33 years I have worked at the Richmond Fed banking has changed immensely. A salient feature of this change — perhaps the single most important feature — has been expanded competition. Today Chicago banks, for example, can own branches in any state, pay market-determined interest rates on deposits and charge ...