U.S. banks must do all they can to promote economic development in low-income areas where high unemployment has persisted despite the overall job market’s significant gains, the nation’s Federal Reserve chair says.
The Associated Press reports Janet Yellen told community development groups on Tuesday that banks are needed not just to provide home mortgages in low- and moderate-income neighborhoods, but also to support educational opportunities and to bolster the development of small businesses.
Yellen notes that this is the 40th anniversary of the Community Reinvestment Act, which requires banks to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods.
Over the past four decades, Yellen says, the law has “helped channel capital into communities, and, in the process, supported innovative and effective approaches to community development.”
Yellen also notes that the Fed recently revised its guidance to clarify how it and other bank regulators plan to assess banks’ support for workforce development in low-income neighborhoods.
Workforce development, Yellen says, is especially important to allow job seekers in such communities to keep up with changes in the economy caused by global competition and advances in technology.
