Regional President Speech

INTRODUCTORY REMARKS COMMUNITY DEVELOPMENT SEMINAR DENVER, COLORADO FEBRUARY 17 , 1988 Good morning and welcome. I am pleased you could join me for this seminar on "Community Development Corporations - ,/ ~ Emarging Options for Community Changen , I would f i rst like to recognize the two organizations ~hat joined us in sponsoring t is program: The Piton Foundation (and J?- ~ 'D--­ The Denver Partnership. The Pit au dation has been commu~ty instrumental in change for over a decade. Its president, Sam Gary, has recognized the role that a private organizati on can play in community development and revitalization and has embraced the challenge to work for constructive change. The Piton Foundation has cooperated with the Ford Foundation and the Rockefeller Foundation, and has itself funded a variety of programs throughout the Denver metropolitan area and across the nation. It has proved to be an effecti ve force for community change. The Denver Partnership has also proved to be a catalyst for change in the Denver community. Organized to promote Downtown Denver, it also seeks to enrich civic life. It helps keep Downtown a vital retail , cultural and business center . My thanks to both organizations for joining us in sponsoring this program. - 2 ­ Many people are surprised to learn of the Federal Reserve's interest in community development. At first blush, community deVelQP~m~t ;,:Y appear inconsistent with the Federal Reserve's roles as ~r4ca s central bank , as monetary policy maker and as banking regulator. Let me assure you it is not . As the nation's central bank , our principal concern is a strong and stable economy which foste r s growth and prosperity in all sectors and regions of our nation. As an organization, we have Federal ~ Reserve Banks in 12 separate regions of the countr~ monitor financial and economic developments first h' nd. We understand the importance of individuals and communities, cities, and regions in contributing to a strong national economy. Our interest in community development, however, reaches far beyond questions of economic policy. Our interest is also closely related to our regulatory responsibilities and to our concerns as a corporate citizen in this city and region. Let me speak briefly to these concerns in a bit more detail. The Federal Reserve's regulatory responsibility for community rei nvestment is tied to the C-ommunity Reinvestment Act which Congress passed in 1977 . The Act requires us "to encourage financial inst itutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institution(s)." This Act and the subsequent regulations differ significantly from most other banking regulations. Most regulations define the "shall not", this particula1 one asks for the "shall". Other - 3 ­ regulations require , for example, that banks shall not fail to disclose credit terms or extend more favorable loan terms to insiders .. The Community Reinvestment Act, however, seeks a proactive role for both lenders and regulators. It calls for lenders to geographically define the communities they serve, to determine the credit needs within those communities and then to help meet those credit needs. Further, it requires regulators to "encourage" lenders to do so. Community development corporations -- the focus of this seminar -- are but one vehicle that lender s can use to address their community's credit needs. These needs can be met through the traditional borrower-lender relationship, or through ownership. As is not the case for most commercial ventures, banks and bank holding companies can have an ownership position in community development corporations. We at the Federal Reserve approve such investments for bank holding companies, the Comptroller of the Currency does so for national banks and the Federal Home Loan Bank Board approves such investments for savings and loans. As for our responsibilities as corporate citizens, we, like you, have an obligation to the communities where we live and work. Since the Federal Reserve is a quasi-public organization, we cannot participate in the community in the same ways and to the same degree as you. However, the Federal Reserve contributes both time and money to Neighborhood Housing Service (NHS) Members of the Board of Governors as well as Reserve act~vities. - 4 ­ Bank management and staff serve ana act as advisors on NBS projects. Our employees contribute generously to other community efforts such as the United Way. I am not here today to endorse any specific projects or activities. I am here to ask you to join me in learning more about community development corporations and the role they can play in community revitalization. I think you will find opportunities which can contribute both to your profits and to your community. Thank you.

J. Roger Guffey (1988, February 16). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19880217_j_roger_guffey

@misc{wtfs_regional_speeche_19880217_j_roger_guffey,
  author = {J. Roger Guffey},
  title = {Regional President Speech},
  year = {1988},
  month = {Feb},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19880217_j_roger_guffey},
  note = {Retrieved via When the Fed Speaks corpus}
}