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 benefit from consumer and community perspectives. The Board promotes consumer protection, financial inclusion, and community development through targeted work in supervision, regulatory policy, research and analysis, and public engagement (see figure 6.1). This section discusses the Federal Reserve's key consumer and community affairs activities during 2023:

• 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 2023. 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 and CRA 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 works 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

In 2023, the Board's regulatory efforts supported financial institutions by clarifying examination guidelines and procedures.² In April, the Federal Reserve and its Federal Financial Institutions Examination Council (FFIEC) partners revised the guide to Home Mortgage Disclosure Act (HMDA) reporting.³ 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. The Reserve Banks completed 365 examinations in 2023. The breakdown of consumer compliance examinations completed by Reserve Banks in 2023 included 184 consumer compliance examinations of state member banks and seven examinations of foreign banking organizations. There were no consumer compliance examinations of Edge Act corporations or agreement corporations in 2023.⁴

Community Reinvestment Act Performance Evaluation and Regulations

The CRA requires that the Federal Reserve Board and the other federal banking agencies assess a bank's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operations. To carry out this mandate and to encourage banks to help meet the credit needs of the local communities in which they are chartered, the Federal Reserve

• examines state member banks and certain other financial institutions 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 and certain other institutions during performance evaluations conducted by staff at the 12 Reserve Banks. During the 2023 reporting period, the Reserve Banks completed 174 CRA examinations of state member banks. Of those banks examined, 23 were rated "Outstanding," 151 were rated "Satisfactory," none were rated "Needs to Improve," and none were rated "Substantial Non-Compliance."

In addition to CRA examinations, the Board and other federal banking agencies continued ongoing efforts to modernize the CRA regulations. After analyzing public comments on the interagency notice of proposed rulemaking issued in May 2022, the agencies issued a final rule in October 2023.⁶ See box 6.1 for more information about the CRA final rule.

Consumer Compliance Enforcement Activities

Fair Lending and UDAP Enforcement

The Federal Reserve is committed to ensuring that the institutions it supervises comply fully with the federal fair lending and consumer protection laws, including 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 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, if the Board has reason to believe that a creditor has engaged in a pattern or practice of discrimination in violation of 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 2023, the Board referred one fair lending matter to the DOJ. The matter involved a pattern or practice of discrimination 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 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 area of supervision, 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 Fair Lending Interagency Webinar, which attracted more than 6,300 registrants in 2023. See box 6.1 for more information about fair lending topics covered at the event.⁷ The Federal Reserve also published an article in Consumer Compliance Outlook sharing information about the most frequent compliance violations in 2022, as well as supervisory observations regarding the assessment of nonsufficient funds fees on represented transactions.⁸

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 2023, the Federal Reserve issued one order, assessing approximately $2,945,500 in civil money penalties against a state member bank to address flood insurance regulatory violations as well as unsafe and unsound practices in its flood insurance compliance program.⁹ In accordance with statutory requirements, the state member bank paid a $58,000 civil money penalty to the Federal Emergency Management Agency for deposit into the National Flood Mitigation Fund and a $2,887,500 civil money penalty to the U.S. Department of the Treasury.

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.¹⁰

The Board provides information on its actions associated with these merger and acquisition transactions, issuing press releases and Board Orders for each.¹¹ The Federal Reserve also publishes semiannual reports that provide pertinent information on applications and notices filed with the Federal Reserve.¹² 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.

Coordination with Other Agencies

Coordination with the Consumer Financial Protection Bureau

During 2023, 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 Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (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 among 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.¹³ 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, the Federal Trade Commission, and the Department of Housing and Urban Development. Staff also participate in the Interagency Task Force on Property Appraisal and Valuation Equity, an initiative to address bias in home appraisals.

In January 2023, the Board issued a statement in coordination with the FDIC, the OCC, the CFPB, and the NCUA stating that, in response to a 2022 U.S. District Court for the District of Columbia decision vacating a portion of a May 2020 Regulation C rulemaking, the Board did not intend to cite HMDA violations or take enforcement action for not collecting or reporting closed-end mortgage loan data originated in 2022, 2021, or 2020 by Federal Reserve-supervised financial institutions that meet Regulation C's other coverage requirements and originated at least 25 closed-end mortgage loans in each of the two preceding calendar years but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years.¹⁴ In April 2023, the Board joined the FDIC, the OCC, the CFPB, and the NCUA in an interagency statement reminding supervised institutions that U.S. dollar (USD) LIBOR panels would end on June 30, 2023, and reiterating expectations that institutions with USD LIBOR exposure should complete their transition of remaining LIBOR contracts away from LIBOR as soon as practicable.¹⁵ The Board, the OCC, and the FDIC issued a final rule modernizing the CRA regulations in October 2023.

Outreach

The Federal Reserve maintains a comprehensive public outreach program to promote consumer protection, financial inclusion, and community reinvestment. During 2023, the Board continued to enhance its program, delivering timely, relevant compliance information to the banking industry, experienced examiners, and other regulatory personnel.

In 2023, two issues of Consumer Compliance Outlook were released, discussing regulatory and supervisory topics of interest to compliance professionals.¹⁶ This publication is distributed to state member banks as well as to BHCs and savings and loan holding companies supervised by the Federal Reserve, among other subscribers. In addition, the Federal Reserve offered one Outlook Live seminar, the 2023 Fair Lending Interagency Webinar, discussed in box 6.1.¹⁷

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 noncomplex community bank.¹⁸ 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 2023, six 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 (CPD) 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 CPD 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 2023, the System continued to offer Rapid Response and similar 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 2023. An additional 14 CPD offerings were delivered that addressed a broader range of supervisory issues, including consumer compliance topics.

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 2023, FRCH processed 31,279 cases. Of these cases, 18,804 were inquiries and the remainder (12,475) were complaints, with most cases received directly from consumers and involving financial institutions other than state member banks supervised by the Federal Reserve. Approximately 18 percent of cases were referred to the Federal Reserve from other federal and state agencies.

Consumers contacted FRCH by a variety of different channels: 59 percent of the FRCH consumer contacts occurred by telephone, and 39 percent of complaint and inquiry submissions were made electronically (via email, online submissions, and fax). The online form page received 49,172 visits during the year.

Consumer Complaints

Complaints against Federal Reserve-regulated entities totaled 6,115 in 2023. Of the total, 95 percent (5,790) were closed, and 5 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 2023, 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, 2023

The Board also tracked complaints that cite discrimination. Twenty-seven complaints alleging credit discrimination based on prohibited borrower traits or rights were received in 2023. Twenty-two 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 2023, there was one with a violation specific to the adverse action notice and one specific to credit reporting. However, they were not related to illegal credit discrimination.

In 46 percent of investigated complaints against Federal Reserve-regulated entities, evidence reviewed did not reveal an error or violation. Of the remaining 54 percent of investigated complaints, 13 percent were deemed regulatory concerns or violations of law; 12 percent were identified errors that were corrected by the bank; 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 2023, 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.

Updating Annual Indexes for Consumer Regulations

Annual Indexing of Exempt Consumer Credit and Lease Transactions

In November 2023, 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 2024 for determining exempt consumer credit and lease transactions will increase from $66,400 in 2023 to $69,500 for 2024. 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.¹⁹

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

In November 2023, 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 $31,000 for 2023 to $32,400 for 2024.²⁰ 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 2023, 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.²¹

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 4.06 percent increase in the CPI-W for the period ending in November 2023, 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 $1.564 billion.
• Intermediate small bank means a small bank with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years.

These asset-size threshold adjustments took effect on January 1, 2024.

Consumer Research and Analysis of Emerging Issues and Policy

Throughout 2023, the Board analyzed emerging issues in consumer financial services practices in order to understand their implications for consumers and the Federal Reserve's responsibilities.

Researching Issues Affecting Consumers and Communities

In 2023, 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 an annual survey of consumers to gather data on their experiences and perspectives through the Survey of Household Economics and Decisionmaking. The SHED collects information to better understand household financial activity and perceptions.

Results of the Board's 10th annual SHED were published in the Economic Well-Being of U.S. Households in 2022report , released in May 2023.²² The survey results reflected the self-reported financial conditions of over 11,000 respondents at the end of 2022.

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

• employment
• expenses and experiences with inflation
• income and savings
• economic preparedness
• banking and credit
• housing and living arrangements
• higher education and student loans
• retirement

The 2022 survey results illustrated the challenges experienced by U.S. families from the elevated rate of inflation at that time. It found that self-reported financial well-being had fallen sharply and was among the lowest observed since 2016. Similarly, the share of adults who said that they spent less than their income in the month before the survey fell in 2022 from the prior year, while the share who said that their credit card debt increased rose. Among adults who were not retired, the survey also showed a decline in the share who felt that their retirement savings plan was on track, suggesting some concerns about people's future financial security.

The report also highlights several new topics added to the survey in 2022, such as actions taken in response to higher prices, financial buffers, and worker autonomy. These new questions provide additional context on the experiences of U.S. adults in navigating higher prices in the marketplace. Additionally, the report continued to include information on emerging financial products including cryptocurrencies and "Buy Now, Pay Later" products.

The survey and report also 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 2022.

In addition to fielding and analyzing these surveys, researchers 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. In 2023, research staff published seven working papers and notes in the Board's Finance and Economics Discussion Series, had 12 papers accepted for publication at economics journals, and released several additional working papers in the International Finance Discussion Papers series.²³ See box 6.1 for more insight into Board research publications.

Community Development Research Seminar Series

In 2023, the Board and the Reserve Banks continued the Federal Reserve System Community Development Research Seminar Series with the theme, "Keys to Opportunity in the Housing Market." 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 and Federal Reserve Bank of Boston Assistant Vice President Beth Mattingly. See box 6.1 for more information about the 2023 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 2023, 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, subject matter experts published two new issues of the Board's Consumer and Community Context article series examining small-dollar consumer credit products and the auto finance market.²⁴ See box 6.1 for more information about Consumer & Community Context and other Board publications.

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.

Understanding Outcomes in the Labor Market

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.

During 2023, the Board's community development initiatives provided insight into post-pandemic employment and workforce development across demographics. Board staff analyzed how childcare and family obligations affected women's participation in the labor force during and after the pandemic.²⁵ The Board also collaborated with Federal Reserve System partners to promote Worker Voices: Shifting Perspectives and Expectations on Employment, a report about job conditions and hiring trends in the context of economic recovery.²⁶

In addition to monitoring the impact of employment disparities, the Federal Reserve also assessed the ways in which post-pandemic economic conditions affected the viability of minority depository institutions (MDIs). In December 2023, the Board released Preserving and Promoting Minority Depository Institutions, an annual report informing the public about Federal Reserve research, events, and other initiatives to preserve and support MDIs.²⁷ During the semiannual Community Advisory Council (CAC) meetings, council members noted how the end of some types of pandemic relief created a greater demand for small business loans from MDIs and community development financial institutions. The Council also shared perspectives on local credit and economic conditions in housing, labor markets, and small businesses.²⁸

Footnotes