Board of Governors of the Federal Reserve System

Consumer and Community Affairs

The Federal Reserve is committed to promoting fair and transparent financial service markets, protecting consumers' rights, and ensuring that its policies and research include consumer and community perspectives. The Board promotes consumer protection, financial inclusion, and community development through targeted work in supervision, regulatory policy, and research and analysis (see figure 6.1). This section discusses the Federal Reserve's key consumer and community affairs activities during 2022:

• formulating and carrying out supervision and examination policy in collaboration with the Federal Reserve System to ensure financial institutions comply with consumer protection laws and regulations
• writing and reviewing regulations that implement consumer protection and community reinvestment laws
• conducting research, analysis, and data collection to identify and assess emerging consumer and community development issues and risks to inform policy decisions
• identifying issues and advancing effective community development by engaging, convening, and informing key stakeholders

To better understand consumer financial circumstances, the Federal Reserve conducted the yearly Survey on Household Economics and Decisionmaking (SHED) in October 2022. For more information on our consumer and community research, see "Consumer Research and Analysis of Emerging Issues and Policy" later in this section.

Consumer Compliance Supervision

The Federal Reserve's consumer protection supervision program assesses compliance by state member banks with a wide range of consumer protection laws and regulations including, but not limited to, the Truth in Lending Act (TILA), the Electronic Fund Transfer Act, the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), and the prohibition on unfair or deceptive acts or practices (UDAP) in the Federal Trade Commission Act (FTC Act). The program also enforces these laws and regulations and reviews state member banks' performance under the Community Reinvestment Act (CRA).

The Board's Division of Consumer and Community Affairs develops policies that govern and establish requirements for oversight of the Reserve Banks' programs for consumer compliance supervision and examination of state member banks and bank holding companies (BHCs), as well as participating in some Large Institution Supervision Coordinating Committee initiatives.

In addition, the Board coordinates with the prudential regulators and the Consumer Financial Protection Bureau (CFPB) as part of the supervisory coordination requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and ensures that consumer compliance risk is appropriately incorporated into financial institutions' consolidated risk-management programs.

The Board also oversees the development and delivery of examiner training and supervision-related budget and technology efforts; analyzes bank and BHC applications related to consumer protection, convenience and needs, and the CRA; and oversees the handling of certain types of consumer complaints by the Reserve Banks and directly processes certain consumer complaints such as congressional complaints and appeals.

Consumer Compliance Examinations

Examinations are the Federal Reserve's primary method of ensuring compliance with consumer protection laws and assessing the adequacy of consumer compliance risk-management systems within regulated entities.¹ During 2022, the Federal Reserve, in conjunction with the federal and state financial institution regulatory agencies, updated regulations to encourage transparency.

The Board's regulatory efforts supported financial institutions by clarifying examination guidelines and procedures. In January 2022, the Board joined the other Federal Financial Institutions Examination Council (FFIEC) agencies in outlining principles for examination information requests, which FFIEC members developed as part of the final phase of the Examination Modernization Project.² The Federal Reserve and its FFIEC partners also revised the guide to Home Mortgage Disclosure Act (HMDA) reporting.³ Issued in May, the updated guide summarizes key requirements to assist financial institutions complying with HMDA as implemented by the CFPB's Regulation C.

The Federal Reserve continued to monitor financial institutions for regulatory compliance during the year. The Reserve Banks completed 370 examinations in 2022. The breakdown of consumer compliance examinations completed by Reserve Banks in 2022 included 183 consumer compliance examinations of state member banks, 172 CRA examinations of state member banks, 13 examinations of foreign banking organizations, and 2 examinations of Edge Act corporations or agreement corporations.⁴

Community Reinvestment Act

The CRA requires that the Federal Reserve and other federal banking regulatory agencies encourage financial institutions to help meet the credit needs of the local communities where they do business, consistent with safe-and-sound operations. To carry out this mandate, the Federal Reserve

• examines state member banks to assess their performance under the CRA,
• considers banks' CRA performance in context with other supervisory information when analyzing applications for mergers and acquisitions, and
• disseminates information about community development practices to bankers and the public through community development offices at the Reserve Banks.⁵

The Federal Reserve assesses and rates the CRA performance of state member banks during examinations conducted by staff at the 12 Reserve Banks. During the 2022 reporting period, the Reserve Banks completed 172 CRA examinations of state member banks. Of those banks examined, 21 were rated "Outstanding," 149 were rated "Satisfactory," 2 were rated "Needs to Improve," and none were rated "Substantial Non-Compliance."

In addition to annual evaluations, the Board continued to work to reform CRA regulations, analyzing public comments on the interagency notice of proposed rulemaking (NPR) and collaborating with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) on preparation of a final rule.⁶

Consumer Compliance Enforcement Activities

Fair Lending and UDAP Enforcement

The Federal Reserve is committed to ensuring that institutions it supervises comply fully with the federal fair lending and consumer protection laws, including the ECOA, the FHA, and the FTC Act, which prohibits unfair or deceptive acts or practices. The ECOA prohibits creditors from discriminating against any applicant, in any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age. In addition, creditors may not discriminate against an applicant because the applicant receives income from a public assistance program or has exercised, in good faith, any right under the Consumer Credit Protection Act. The FHA prohibits discrimination in residential real estate–related transactions, including the making and purchasing of mortgage loans, on the basis of race, color, religion, sex, handicap, familial status, or national origin.

The Federal Reserve supervises all state member banks for compliance with the FHA. The Federal Reserve and the CFPB have supervisory authority for compliance with the ECOA. For state member banks with assets of $10 billion or less, the Board has the authority to enforce the ECOA. For state member banks with assets over $10 billion, the CFPB has this authority.

With respect to the FTC Act, the Federal Reserve has supervisory and enforcement authority over all state member banks, regardless of asset size and consults with the CFPB with regard to state member banks over $10 billion in assets. An act or practice may be found to be unfair if it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers and not outweighed by countervailing benefits to consumers or to competition. A representation, omission, or practice is deceptive if it is likely to mislead a consumer acting reasonably under the circumstances and is material, and thus likely to affect a consumer's conduct or decision regarding a product or service.

When examiners find evidence of potential discrimination or potential UDAP violations, they work closely with the Board's Fair Lending or UDAP Enforcement staff, who provide additional legal and statistical expertise and ensure that fair lending and UDAP laws are enforced consistently and rigorously throughout the Federal Reserve System.

With respect to fair lending, pursuant to the ECOA, if the Board has reason to believe that a creditor has engaged in a pattern or practice of discrimination in violation of the ECOA, the matter must be referred to the Department of Justice (DOJ). The DOJ reviews the referral and determines whether further investigation is warranted. A DOJ investigation may result in a public civil enforcement action. Alternatively, the DOJ may decide to return the matter to the Board for administrative action. If a matter is returned to the Board, staff ensure that the institution takes all appropriate corrective action.

In 2022, the Board referred one fair lending matter to DOJ. The matter involved a pattern or practice of discrimination on the basis of familial status and through discouragement on the basis of marital status in violation of ECOA and Regulation B.

If there is a fair lending violation that does not constitute a pattern or practice of discrimination under the ECOA or if there is a UDAP violation, the Federal Reserve takes action to ensure that the violation is remedied by the bank. The Federal Reserve uses a range of supervisory and enforcement tools, including nonpublic and public enforcement actions, to resolve any ECOA, FHA, or UDAP violations and ensure that the institution takes appropriate corrective action. For example, the Federal Reserve often uses informal supervisory tools such as memoranda of understanding between banks' boards of directors and the Reserve Banks, or board resolutions to ensure that violations are corrected. When necessary, the Board can bring public enforcement actions.

Given the complexity of this supervision area, the Federal Reserve seeks to provide transparency on its perspectives and processes to the industry and the public. Fair Lending and UDAP Enforcement staff meet with supervised institutions, consumer advocates, and industry representatives to discuss fair lending and UDAP issues and receive feedback. Through this outreach, the Board can address emerging fair lending and UDAP issues and promote sound fair lending and UDAP compliance. This includes staff participation in numerous meetings, conferences, and training events.

The Federal Reserve's outreach included the annual Board-sponsored Interagency Fair Lending Webinar, which attracted more than 6,393 registrants in 2022 and covered a variety of fair lending topics such as redlining, appraisal bias, special purpose credit programs, and other supervision and enforcement-related updates from participating agencies.⁷

Flood Insurance Enforcement

The National Flood Insurance Act imposes certain requirements on loans secured by buildings or mobile homes located in, or to be located in, areas determined to have special flood hazards. Under the Federal Reserve's Regulation H, which implements the act, state member banks are generally prohibited from making, extending, increasing, or renewing any such loan unless the building or mobile home, as well as any personal property securing the loan, are covered by flood insurance for the term of the loan. The law requires the Board and other federal financial institution regulatory agencies to impose civil money penalties when they find a pattern or practice of violations of the regulation.

In 2022, the Federal Reserve issued six formal consent orders and assessed approximately $436,400 in civil money penalties against state member banks to address violations of the flood regulation.⁸ These statutorily mandated penalties were forwarded to the National Flood Mitigation Fund held by the Treasury for the benefit of the Federal Emergency Management Agency.

Mergers and Acquisitions

The Board is required by law to consider specific factors when evaluating proposed mergers and acquisitions, including competitive considerations, financial condition, managerial resources (including compliance with laws and regulations), convenience and needs of the community to be served (including the record of performance under the CRA), and financial stability.

In evaluating bank applications, the Federal Reserve relies on the banks' overall compliance record, including recent fair lending examinations. In addition, the Federal Reserve considers the CRA records of the relevant depository institutions, assessments of other relevant supervisors, the supervisory views of examiners, and information provided by the applicant and public commenters. If warranted, the Federal Reserve will also conduct pre-membership exams for a transaction in which an insured depository institution will become a state member bank or in which the surviving entity of a merger would be a state member bank.⁹

The Board provides information on its actions associated with these merger and acquisition transactions, issuing press releases and Board Orders for each.¹⁰ The Federal Reserve also publishes semiannual reports that provide pertinent information on applications and notices filed with the Federal Reserve.¹¹ The reports include statistics on the number of proposals that were approved, denied, and withdrawn as well as general information about the length of time taken to process proposals. Additionally, the reports discuss common reasons that proposals have been withdrawn from consideration. Furthermore, the reports compare processing times for merger and acquisition proposals that received adverse public comments and those that did not. See box 6.1 for information on some of the Board's 2022 initiatives related to banking mergers and acquisitions.

Coordination with Other Agencies

Coordination with the Consumer Financial Protection Bureau

During 2022, staff continued to coordinate on supervisory matters with the CFPB in accordance with the Interagency Memorandum of Understanding on Supervision Coordination. The agreement is intended to establish arrangements for coordination and cooperation among the CFPB and the Board of Governors, the OCC, the FDIC, and the National Credit Union Association (NCUA). The agreement strives to minimize unnecessary regulatory burden and to avoid unnecessary duplication of effort and conflicting supervisory directives amongst the prudential regulators and the CFPB. The regulators work cooperatively to share exam schedules for covered institutions and covered activities to plan simultaneous exams, provide final drafts of examination reports for comment, and share supervisory information.

Coordination with Other Federal Banking Agencies

The Board regularly coordinates with other federal banking agencies, including through the development of interagency guidance, to clearly communicate supervisory expectations. The Federal Reserve also works with the other member agencies of the FFIEC to develop consistent examination principles, standards, procedures, and report formats.¹² In addition, the Federal Reserve participates in the Joint Task Force on Fair Lending, composed of all the prudential regulators, the CFPB, the DOJ, the Federal Housing Finance Agency (FHFA), the Federal Trade Commission, and the Department of Housing and Urban Development (HUD). Staff also participate in the Interagency Task Force on Property Appraisal and Valuation Equity, an initiative to address bias in home appraisals. In February 2022, the Board joined the prudential regulators, the CFPB, HUD, the DOJ, and the FHFA, in an interagency statement reminding creditors of the ability under ECOA and its implementing Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons.¹³ Later in 2022, the Board joined the prudential regulators, the CFPB, and state financial regulators in issuing a statement announcing that they would provide appropriate regulatory assistance to those institutions subject to their supervision that suffered operational impacts from Hurricanes Fiona and Ian, as well as encouraging institutions operating in the affected areas to meet the financial services needs of their communities.¹⁴

Updating Examination Procedures

In 2022, Board staff worked with other federal banking agencies to develop and revise examination procedures to provide clarity on supervisory expectations regarding consumer compliance.

In December, the Board issued revised examination procedures for use in connection with the Fair Debt Collection Practices Act (FDCPA) to reflect amendments to Regulation F published by the CFPB in 2020 and 2021.¹⁵ These updates addressed communications in connection with debt collection, prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection. They also clarified the information that a debt collector must provide to a consumer at the outset of debt collection communications and addressed consumer protection concerns related to passive collections and the collection of debt that is beyond the statute of limitations.

Interagency Questions and Answers for Interagency Flood Insurance Proposal

In May, five federal regulatory agencies, including the Board, issued revised Interagency Questions and Answers Regarding Private Flood Insurance.¹⁶ These Interagency Questions and Answers are intended to assist lenders in meeting their responsibilities under the federal flood insurance law and increase public understanding of the agencies' respective flood insurance regulations.¹⁷

Significant topics addressed by the revisions include guidance related to major amendments to the flood insurance laws regarding the escrow of flood insurance premiums, the detached structure exemption, force placement procedures, and the acceptance of flood insurance policies issued by private insurers.

This issuance consolidated the questions and answers proposed by the agencies in July 2020 and the questions and answers proposed by the agencies in March 2021 into one set of Interagency Questions and Answers Regarding Flood Insurance.

Outreach

The Federal Reserve maintains a comprehensive public outreach program to promote consumer protection, financial inclusion, and community reinvestment. During 2022, the Board continued to enhance its program, delivering timely, relevant compliance information to the banking industry, experienced examiners, and other regulatory personnel.

In 2022, three issues of Consumer Compliance Outlook were released, discussing regulatory and supervisory topics of interest to compliance professionals.¹⁸ This publication is distributed to state member banks as well as to bank and savings and loan holding companies supervised by the Federal Reserve, among other subscribers. In addition, the Federal Reserve offered two Outlook Live seminars, the "2022 Fair Lending Interagency Webinar" and the "2022 Interagency Flood Insurance Q&A Webinar."¹⁹ During the Fair Lending Interagency Webinar, the Federal Reserve discussed a report it released publicly that provides information by metropolitan statistical area (MSA) that can help lenders and the public understand the census tract boundary and demographic composition changes that result from the 2020 decennial census. These census reports by MSA will help banks assess and manage redlining risk.²⁰

Examiner Training

The Federal Reserve's Examiner Training program supports the ongoing professional development of consumer compliance supervisory staff, from an initial introduction to the Federal Reserve System through the development of proficiency in consumer compliance topics sufficient to earn an examiner's commission and beyond. The goal of these efforts is to ensure that examiners have the skills necessary to meet their supervisory responsibilities now and in the future.

Consumer Compliance Examiner Commissioning Program

The Consumer Compliance Examiner Commissioning Program is designed to provide an examiner with (1) a foundation for supervision in the Federal Reserve System and (2) the skills necessary to effectively perform examiner-in-charge responsibilities at a non-complex community bank.²¹ On average, examiners progress through a combination of self-paced online learning, classroom offerings, virtual instruction, and on-the-job training over a period of two to three years. Achievement is measured by completing the required course content, demonstrating adequate on-the-job knowledge, and passing a professionally validated proficiency examination.

In 2022, 10 examiners passed the Consumer Compliance Proficiency Examination. The combination of multiple training delivery channels offers learners and Reserve Banks an ability to customize learning and meet training demands more individually and cost effectively.

Continuing Professional Development

In addition to providing core examiner training, continuing, career-long learning is offered. Opportunities for continuing professional development include online learning modules, special projects and assignments, self-study programs, rotational assignments, instruction at System schools, mentoring programs, and the Consumer Compliance Senior Forum held every 18 months. Staff have access to continuing professional development resources on a variety of topics, including learning assets for examiners moving into examiner responsibilities at larger financial institutions and other curated learning content.

In 2022, the System continued to offer Rapid Response sessions to provide timely training to examiners through webinars and case studies on emerging issues or to address urgent training needs that result from, for example, the implementation of new laws or regulations. Four Rapid Response sessions with an exclusive consumer compliance focus were designed, developed, and presented to System staff during 2022. An additional 40 Rapid Response sessions were offered that addressed a broader range of supervisory issues, including sessions in which consumer compliance topics were touched upon.

Responding to Consumer Complaints and Inquiries

The Federal Reserve investigates complaints against state member banks and selected nonbank subsidiaries of BHCs (Federal Reserve-regulated entities), and forwards complaints against other creditors and businesses to the agency with relevant authority. Each Reserve Bank investigates complaints against Federal Reserve-regulated entities in its District. The Federal Reserve also responds to consumer inquiries on a broad range of banking topics, including consumer protection questions.

Federal Reserve Consumer Help (FRCH) processes consumer complaints and inquiries centrally. In 2022, FRCH processed 33,513 cases. Of these cases, 19,628 were inquiries and the remainder (13,885) were complaints, with most cases received directly from consumers and involving financial institutions other than state member banks supervised by the Federal Reserve. Approximately 13 percent of cases were referred to the Federal Reserve from other federal and state agencies.

Consumers contacted FRCH by a variety of different channels: 57 percent of the FRCH consumer contacts occurred by telephone, and 40 percent of complaint and inquiry submissions were made electronically (via email, online submissions, and fax). The online form page received 50,122 visits during the year.

Consumer Complaints

Complaints against Federal Reserve-regulated entities totaled 4,853 in 2022. Of the total, 89 percent (4,304) were closed, and 11 percent were still under investigation.

Approximately 3 percent of the closed complaints were pending the receipt of additional information from consumers, referred to another regulatory agency, or withdrawn by the consumer.

Complaints about Products and Practices

During 2022, the Federal Reserve monitored consumer complaints by product and common subjects of complaint (see table 6.1).

Table 6.1. Complaints against state member banks and selected nonbank subsidiaries of bank holding companies by product and subject of complaint, 2022

The Board also tracked complaints that cite discrimination. Seventeen complaints alleging credit discrimination based on prohibited borrower traits or rights were received in 2022. Eleven discrimination complaints were related to the race, color, national origin, or ethnicity of the applicant or borrower. Three discrimination complaints were related to either the age or sex of the applicant or borrower. The remainder were related to handicap and public assistance income. Of the closed complaints alleging credit discrimination based on a prohibited basis in 2022, there were two with a violation specific to the adverse action notice; however, they were not related to illegal credit discrimination.

In 38 percent of investigated complaints against Federal Reserve-regulated entities, evidence reviewed did not reveal an error or violation. Of the remaining 62 percent of investigated complaints, 15 percent were identified errors that were corrected by the bank; 4 percent were deemed violations of law; and the remainder included matters involving litigation, externally and internally referred complaints, complaints resolved by the bank after the consumer filed the complaint with FRCH, or information was provided to the consumer.

Consumer Laws and Regulations

Throughout 2022, the Board continued to administer its regulatory responsibilities with respect to certain entities and specific statutory provisions of the consumer financial services and fair lending laws. This included drafting regulations and issuing compliance guidance for the industry and the Reserve Banks and fulfilling its role in consulting with the CFPB on consumer financial services and fair lending regulations for which the CFPB has rulemaking responsibility.

Outreach

In May, the Board, the FDIC, and the OCC issued an interagency CRA NPR after receiving substantial feedback from stakeholders. In addition to extensive outreach and research, the Board collected public comments on the NPR through August. The Board also participated in an interagency webinar that provided an overview of the CRA proposal and its objectives.²²

Information and resources about the CRA NPR is available on the Board's website at https://www.federalreserve.gov/consumerscommunities/community-reinvestment-act-proposed-rulemaking.htm.

Updating Annual Indexes for Consumer Regulations

Annual Indexing of Exempt Consumer Credit and Lease Transactions

In October 2022, the Board and the CFPB announced that the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) that will apply in 2023 for determining exempt consumer credit and lease transactions will increase from $61,000 in 2022 to $66,400 for 2023. These thresholds are set pursuant to statutory changes enacted by the Dodd-Frank Act that require adjusting these thresholds annually based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Transactions at or below the thresholds are subject to the protections of the regulations.²³

Annual Indexing of Threshold for Small Loan Exemption from Appraisal Requirements for Higher-Priced Mortgage Loans

In October 2022, the Board, the CFPB, and the OCC announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans would increase from $28,500 for 2022 to $31,000 for 2023.²⁴ The Dodd-Frank Act amended TILA to add special appraisal requirements for higher-priced mortgage loans, including a requirement that creditors obtain a written appraisal based on a physical visit to the home's interior before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less and also provide that the exemption threshold will be adjusted annually to reflect increases in the CPI-W.

Annual Adjustment to Community Reinvestment Act Asset-Size Thresholds for Small and Intermediate Small Banks

In December 2022, the Board and the FDIC announced the annual adjustment to the asset-size thresholds used to define small bank and intermediate small bank under the CRA regulations.²⁵

Financial institutions are evaluated under different CRA examination procedures based on their asset-size classification. Those meeting the small and intermediate small bank asset-size thresholds are not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as a large bank.

Annual adjustments to these asset-size thresholds are based on the change in the average of the CPI-W, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million.

As a result of the 8.60 percent increase in the CPI-W for the period ending in November 2022, the definitions of small bank and intermediate small bank for CRA examinations were changed as follows:

• Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion.
• Intermediate small bank means a small bank with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments took effect on January 1, 2023.

Consumer Research and Analysis of Emerging Issues and Policy

Throughout 2022, the Board analyzed emerging issues in consumer financial services practices in order to understand their implications for the consumer risk analyses and supervisory policies that are core to the Federal Reserve's functions. This research and analysis also provided insight into consumer financial decisionmaking.

Researching Issues Affecting Consumers and Communities

In 2022, the Board explored various issues related to consumers and communities by convening experts, conducting original research, and fielding surveys as part of its continuing commitment to gain insights into consumers' financial and communities' economic development experiences. This work was essential to identifying emerging issues and understanding the progress of economic recovery after the COVID-19 pandemic.

Household Economics and Decisionmaking

The Board conducts regular internet panel surveys to gather data on consumers' experiences and perspectives on various issues of interest through the Survey of Household Economics and Decisionmaking.

The Board first launched the survey in 2013 to better understand consumer decisionmaking in the wake of the Great Recession, with the aim of capturing a snapshot of the financial and economic well-being of U.S. households. In doing so, the SHED collects information on households that is not readily available from other sources or is not available in combination with other variables of interest.

Results of the Board's ninth annual SHED were published in the report Economic Well-Being of U.S. Households in 2021, released in May 2022.²⁶ The survey results reflected the self-reported financial conditions of 11,874 respondents at the end of 2021.

The survey asked respondents about specific aspects of their financial lives, including the following areas:

• employment and informal work
• income and savings
• economic preparedness
• banking and credit
• housing and living arrangements
• K-12 education and higher education
• education debt and student loans
• retirement

The 2021 survey results highlighted the positive effects of the economic recovery on the individual financial circumstances of U.S. families, despite persistent concerns that people expressed about the national economy. In 2021, perceptions about the strength of the national economy declined slightly. Yet self-reported financial well-being increased to the highest rate since the survey began in 2013. The share of prime-age adults not working because they could not find work had returned to pre-pandemic levels. More adults were able to pay all their monthly bills in full than in either 2019 or 2020. Additionally, the share of adults who would pay a $400 emergency expense using cash or its equivalent increased, reaching a new high since the survey began in 2013.

The report also highlights several new topics added to the survey in 2021, such as disruptions from natural disasters, rental debt, and employer vaccine mandates. These new questions provide additional context on the experiences of U.S. adults in handling unexpected expenses, paying for housing, and navigating ongoing changes in the labor market.

To better understand consumer experiences with emerging products, cryptocurrencies and "Buy Now, Pay Later" products were included on the survey for the first time. See box 6.1 for more information on the SHED's inclusion of emerging financial products.

Additionally, the report provided insights into long-standing issues related to individuals' personal financial circumstances, including returns to education, housing situations, and retirement savings. In many cases, the survey found that disparities by education, race and ethnicity, and income persisted in 2021.

In addition to fielding and analyzing these surveys, economists in the Division of Consumer and Community Affairs published articles throughout the year in various publications and journals, contributing to a body of research exploring issues impacting consumers and communities.²⁷

Community Development Research Seminar Series

In 2022, the Board and the Reserve Banks continued the Federal Reserve System Community Development Research Seminar Series for the second year with the theme, Toward an Inclusive Recovery. This series convenes researchers, policymakers, and practitioners across sectors to consider important issues that low- to moderate-income people and communities face, exploring the latest research to inform effective strategies to advance opportunity for economically vulnerable households and areas.

The seminars featured keynote remarks by Governor Michelle Bowman, Federal Reserve Bank of St. Louis President Jim Bullard, and Federal Reserve Bank of Minneapolis President Neel Kashkari. See box 6.1 for information about the Board's participation in the Community Development Research Seminar Series.

Analysis of Emerging Issues

Board staff analyze data and anticipate trends, monitor legislative activity, form working groups, and organize expert roundtables to identify emerging consumer risks and inform supervision, research, and policy.

In 2022, the Board analyzed a broad range of issues in financial services markets that potentially pose risks to consumers. Topics of interest included

• assessing consumer risk during and after the pandemic,
• understanding the effects of inflation on low-income families,
• tracking housing trends, and
• monitoring credit for small businesses.

The Board convened a consumer risk-focused workshop series for staff from the Board, Reserve Banks, and other federal agencies in September. The discussion considered new consumer financial products in the context of product design, consumer risk, financial inclusion, and supervisory insights. In addition, Board subject matter experts examined credit availability for smaller firms that may lack the financing options and in-house resources of larger companies. See box 6.1 for information about small businesses' experiences with online lenders.

Community Development

The Federal Reserve System's community development function promotes economic growth and financial stability for underserved households and communities through research and public outreach. Community development is largely a decentralized function within the Federal Reserve System, and the Community Affairs Officers at each of the 12 Reserve Banks design strategies to respond to the specific needs and interests of community development stakeholders in their respective Districts. Board staff provide oversight for alignment with Board objectives and coordination of System priorities.

Perspectives from Main Street

The community development function works to ensure that the voices of consumers and communities inform policy and research and solicits diverse views on issues affecting the economy and financial markets. These perspectives help improve research, policies, and transparency.

To that end, the Board partnered with the Reserve Banks and seven national partners on the 2022 Perspectives from Main Street survey to better understand the progress of economic recovery after the COVID-19 pandemic. Through a convenience sampling method that relied on contact databases, the online survey compared conditions in low- and moderate-income communities during August 2022 relative to 2021. Announced in November 2022, the findings showed signs of recovery.²⁸ Of respondents, more than 40 percent expected their communities to be almost or fully recovered by 2023. However, 30 percent of respondents continued to experience significant disruptions, with staff shortages and lack of childcare cited as the main challenges.

Similarly, the Federal Reserve promotes access to credit and financial services for lower-income communities of color by understanding and promoting the viability of minority depository institutions (MDIs). The Board released Preserving and Promoting Minority Depository Institutions in September 2022, an annual report informing the public about Federal Reserve research, events, and other initiatives to preserve and support MDIs.²⁹ During the semiannual Community Advisory Council (CAC) meetings, council members noted the importance of liquidity for MDIs and community development financial institutions. The Council also shared perspectives on local credit and economic conditions in housing, labor markets, and small businesses.³⁰

Footnotes