This is the Cato Daily Podcast for Thursday, May 28th, 2020.

I'm Caleb Brown.

Federal regulators have adopted a new regulation under the Community Reinvestment Act, the CRA was supposed to address disparities

in mortgage lending among racial categories.

Cato's Diego Zilawaga whose research informed some proposed changes to CRA regulations,

and discusses what good policy ended up in that final rule.

So the CRA is a statute from 1977,

a very different time in which there continued to be a lot of credit

discrimination and there was decline, particularly in urban communities across America,

and there was a great deal of concern that despite the Civil Rights Act and other anti-discrimination measures

that banks wouldn't lend in primarily low-income and minority communities and in the context of urban decline that things would only get worse.

And so the CRA was passed in a bit to encourage banks to serve people of all incomes and people of all groups within the communities near their branches.

And there have been implementing regulations over time that have changed,

and the last time they changed was in 1995.

That's a long time ago.

It's before the rise of the internet.

It's before a lot of consolidation happened in banking across America.

So changes in those regulations were long overdue and when the controller of the currency that was named

when the Trump administration came into office, Joe Odding, when he came into office, he made it a priority to reform the

CRA. So this is a two year-long effort and in my research I have found that it is

indeed necessary to make a lot of changes to CRA regulations because the context in which they operate has completely changed not only in terms of digital banking and consolidation which I mentioned

but also because as we've had more and more people move into urban

...