ViewPoint Live: Atlanta Fed Executives to Address Regional Banking Conditions - November 13, 2017

Bostic Discusses "Stark" Rural-Urban Divide, CRA

As the Federal Reserve continues to refine its post-financial crisis regulatory approach, it's important to consider not only how rules affect smaller banks but also how they apply to institutions in small, rural communities, Federal Reserve Bank of Atlanta President Raphael Bostic said during a recent webcast.

Since joining the Atlanta Fed in June, Bostic has met with numerous bankers and business leaders in rural and metropolitan areas across the Southeast. He noted that in some smaller markets, community banks account for the majority of small business lending. It is vital to the economic health of small towns that regulations not diminish their banks' ability to supply capital, Bostic said.

"You think about some of the more rural places in our district, they may be primarily served by one of these community institutions, and if they don't have that, those places are going to really struggle," he remarked.

Indeed, Bostic added that the differences between rural and metropolitan economies in the region have prompted him to think deeply about the role he and the Atlanta Fed can play in helping both types of areas prosper.

"The urban-rural divide in the district is one that is pretty stark, and it's consistent across the entire district," said Bostic, who made a speech on the topic November 14 in Montgomery, Alabama.

Bostic appeared on the Atlanta Fed Supervision and Regulation (S&R) division's ViewPoint Live webcast on November 13. He joined Mike Johnson, executive vice president in S&R, and Senior Financial Specialist Lali Shaffer.

In addition to key risks and other matters concerning community banks, they discussed the future of the Community Reinvestment Act (CRA). Passed by Congress in 1977, the CRA encourages financial institutions to meet the needs of their entire service areas through safe lending and access to retail banking and community development services.

But the CRA is structured with brick-and-mortar branches in mind. As electronic banking proliferates and physical branches become less important, financial regulatory agencies including the Fed must refine what constitutes a bank's service area and how the agencies measure banks' performance in meeting CRA requirements, Bostic said.