Federal Reserve Chairman Jerome Powell said Monday that the strong U.S. economy is masking the struggles of many families in lower-income communities.
Powell said those communities still have not recovered from the declines in home values that occurred when the housing bubble burst more than a decade ago.
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As many low- and moderate-income homeowners saw their wealth stripped away as home values dropped, they could not tap the equity in their homes to send their children to college or start a new business, the Fed chairman said.
Powell said these activities are “the basis upon which a strong economy is built” and therefore more needs to be done to provide support.
His comments came in a video message to a Washington conference sponsored by the National Community Reinvestment Coalition.
The coalition was formed in 1990 by national, regional and local organizations seeking to increase the flow of capital to low-income areas of the country.
Powell said that the housing collapse did a lot of economic harm to low-income neighborhoods.
“When lower-income individuals and families struggle, it harms their health and well-being and also weakens our economy,” he said. For that reason, Powell said, it was important to support efforts to connect people to the education, training and other resources they need to help secure good jobs and other opportunities.
The Federal Reserve, along with other banking agencies, oversees implementation of the Community Reinvestment Act, the law that seeks to make sure financial institutions provide loans in low- and moderate-income neighborhoods.
Powell said that the Fed supports a current interagency effort to revise the regulations in a way that they will promote “clarity and consistency in our evaluation of banks” and how they are meeting the lending goals of the Community Reinvestment Act.
“We value the CRA’s role in meeting the credit needs of low- and moderate-income neighborhoods and want to be very careful that any revisions serve to strengthen the CRA’s purpose,” Powell said.