Corporate Counsel Daily, Fed’s Barr touts CRA-supported public-private partnerships, (Mar 25, 2026)

By Nora Macaluso

The Federal Reserve has a variety of programs to help banks bring investment to underserved communities, the Fed governor said.

Public-private partnerships are a “blueprint” for community development, and the Community Reinvestment Act (CRA) is a key mechanism for the Federal Reserve’s role in bringing investment to underserved communities, Fed Governor Michael S. Barr said.

“The public and private sectors can be more effective tackling problems together than they would be working separately,” Barr said in remarks prepared for delivery at a community investment conference in Phoenix, Arizona. Government, he said, “confers legitimacy in setting goals and represents a community’s commitment” to its objectives, while business can move quickly and efficiently.

The CRA helps support a range of services to low-income communities, said Barr. “For banks, effective CRA partnerships with public and other private-sector stakeholders bring in new customers, strengthen their base of existing customers, and develop knowledge and expertise that will support more lending and investment in the future,” he said. “For the public sector, these partnerships greatly expand the community’s financial capacity. With prudent program design and financing structure, a relatively small public investment can attract significant private capital.”

Barr pointed to CRA programs such as the low-income housing tax credit (LIHTC), the New Market Tax Credit (NMTC), and the community development financial institution (CDFI) programs as examples.

“The CRA and the NMTC work hand in hand to bring meaningful investment into communities that have too often been overlooked,” Barr said. The NMTC offers a “powerful tax incentive” for investors to finance community projects, he said. “The CRA provides the regulatory commitment, and NMTC program provides the financial incentive—aligning public policy with private capital to drive job creation, expand essential services, and strengthen neighborhoods for the long term,” he said.

The LIHTC, Barr said, “has been a fundamental resource for financing affordable housing for 40 years.” The CRA “creates the expectation to invest, and LIHTC provides the tool to do it,” he said, noting that the program provides state and local agencies with about $10.5 billion in annual budget authority for low-income housing.

Barr highlighted a Philadelphia project as an example of the CRA’s usefulness in encouraging public-private partnerships. The Philadelphia Housing Authority took the lead on a $50 million development project in the underserved Sharswood neighborhood of North Philadelphia, and the area, formerly a federally designated “food desert” lacking medical and other resources, now has housing, green space, retail, and a medical clinic, with financing coming from sources including the NMTC, he said.

“In addition to local crowdfunding from private investors, a critical role is being played by banks that purchased NMTC equity and provided additional CRA-aligned capital,” Barr commented.

Projects in Texas, Kentucky, Tennessee, and Arkansas are benefiting from a project called Dreambuild in which nonprofit organizations used funding from a national bank to finance a line of modular homes, Barr said. “Many Dreambuild homes in South Texas are financed through a for-profit-, stockholder-held CDFI owned by 12 banks and other organizations,” he said.

“I’ve seen work like this first-hand all around the country as I’ve visited the Reserve Bank Districts,” Barr noted. Public-private partnerships, he said, can be structured to fit particular communities, and this “flexibility” is one of the reasons the CRA is effective at fostering these partnerships.

Barr’s speech also touched on Fed rate policy. He said he “supported” the Federal Open Market Committee’s recent decision to hold its policy rate steady. “It is my view that we may need to keep rates steady for some time as we assess economic conditions,” he said.

“While I am hopeful that inflation will fall as the effects of tariffs on prices wane later this year, I would like to see evidence that goods and services price inflation is sustainably retreating before considering reducing the policy rate further, provided labor market conditions remain stable,” Barr said. “Moreover, the conflict in the Middle East raises additional risks. Higher oil prices tend to pass through pretty quickly to gasoline prices, and higher gasoline prices can be particularly painful for low- and moderate-income families.”

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