these attacks become difficult to do, but we harbor the technologies so it is very difficult. >> this exemplifies people thinking of the risks of cloud computing. >> i can empower you to do more. as a copilot. it should be accessible to everybody, regardless of where you are in the world or what demographic you are in. if it's a developing country or first world country, all of them should have access to this technology. i look forward to see how it evolves over the coming years. >> while it is great technical -- technological progress, i know it presents great challenges. >> i made my documentary on doing videos and interviews on

in icloud. but using the internet, i think to myself, the future of cloud computing is bright, indeed. >> to watch this and all winning entries, visit our website at studentcam.org. >> federal reserve supervision vice chair michael bar talked about banking regulations at an economic conference in washington, d.c. hosted by the national reinvestment coalition, this runs just under 30 minutes.

why these rules were necessary, why they are better? michael: as you suggested, i will not, on the lawsuit. -- comment on the lawsuit. but i think it's important to understand how important the community reinvestment act is and can be for communities all over the country. all of the organizations in this room know that you have been working on it firsthand for many decades. i see john taylor over here. [applause] you all have been working on the stage for so many, many decades. you know how important it is to have good bank partners in the work you have in your communities. one of the reasons you can have good bank partners in your

communities is with a strong community reinvestment act. what we have done under the community reinvestment act rules is really update cra for the communities that you live in today. what does that mean, it means providing greater clarity and transparency's so both communities and banks could no what the expectations is. it means updating the rules so you know what community that -- community development activities count for cra consideration. it means making sure that banks are serving their entire communities, whether the communities are the bank branches or in other parts of the country where they are doing lending and investing. that kind of approach really has the opportunity to make cra vibrant for the next 25-30 years. >> i should also ask, there is an underlying statute, would it

be helpful for congress to modernize the law? >> one of the things i think that is positive about the way congress wrote this law, they wrote it in 1977 in a broadway. they left it to the banking agencies to make sure that cra kept working overtime. so, cra was put in place in 1977 as part of a series of laws that the equal credit opportunity act, the homeowner disclosure act, the housing act and cra were really designed together to make our financial system work better for communities. to serve communities, to serve their entire communities in a better way. it was written in such a way that it permits the bank agencies to get together periodically as we did in 1995

and almost three decades later with the 2023 rule, to make sure it keeps pace with the modern world we live in. >> it sounds like, no, not necessarily. since we have a lot of cra's, i want to dig in on the details. there has been a lot of talk about the new metrics in the rules, i know there's also some qualitative factors. i'm wondering, particularly relevant to this audience, what is the difference in terms of what the community group input means in the new process from the old process and to the new? >> the community group input is one of the constants over time. so, the new rule improves our metrics, our quantitative metrics, our comparability, transparency across the system in a positive way. it raises the bar so that we see more bank lending. i think there's lots of room to

see better bank lending in this space. i will get to it in a second. one of the constants is that it's really critical for examiners and for banks to know they -- how they are doing from the community groups and affordable housing providers and small-business lenders on the ground in communities that set the performance context for the evaluation that bank examiners need to do. community organizations know, better than anybody, what the needs of the community are. what the caps in lending or investing in the community are. how good is the local bank or the national bank, the bank serving these communities, how well are they doing? that community group input is essential for making good, qualitative judgments about the performance of a bank under cra. >> in trying to answer those questions, what kind of feedback

is the most useful? michael: i think as much detail as possible in the kind of things that i said. what are the gaps in lending, what are the gaps and investing, what are the gaps in services? how well are low and moderate income people currently being served? what are the innovative products needed in the local community that can make a difference? what are the deals that are harder to structure in that community, therefore should get more credit. should be seen as having a greater impact in that community ? from a forward-looking perspective and from a backward looking perspective, what has your experience been in working with bank serving this community? are they responsive to community needs? are they being creative in the product and services they offer? at the basic level, are they meeting the financial services needs of the communities? >> banks are also weighted on

different geographic locations, and then at the overall institution level. how does that work, how does the geographic location relate to the overall grade? michael: one of the things that this rule does is updates the community reinvestment act in important ways by including, for assessment, for certain banks that do activity outside of their branch network, making sure that those communities also are brought into the evaluation. if you have a bank doing lots of lending outside of its branch network, or if it's an online bank and does not have any branch network, you want to know how well it serving low and moderate income people in all of the communities where it is doing business. so the rule takes that into account. the rule also includes a clarity to let banks know and communities no that development financing activity can be

measured in communities all across the country. one of the things that does is, let's say you have some parts of the country where there is lots of bank community development activity. and there is almost too much competing for those deals. then you have other parts of the country where there is no community development activity at all, or very little. for example, a lot of native lands don't have enough banks with branches on them, and they historically have gotten very little community development financing. this rule would now give credit for a bank -- let's say you have a bank that wants to survey native community, doesn't happen to have a branch there, they could get credit for providing community development finance to that native american community, as an example. that's an important update to the rule. to your question, how do these things added up? they get waited.

if you have a bank that is mostly based in the western part of michigan that does some lending in the eastern part of michigan, those two things get waited by the extent of their activity. sometimes banks wonder, if i do a little bit over here, in my going to have to change my business in order to comply with cra? the answer is, no. if you do a lot of activity in one place, make sure your low and moderate income lending and investing is commensurate with your engagement. if you do a little bit of activity in another community, make sure your low and moderate income activity is commensurate with your engagement there. those get waited. the activities you are doing more of count more than the areas where you are doing less. that waiting mean cra is really flexible and to open to the business practices and models of the banks. >> that's really interesting.

another thing that i think banks are particularly focused on is bank mergers and cra's, a component of that. to what extent do you, when you are looking at mergers generally, to what extent do you want to see an affirmative benefits of the community as far as why this merger should go through? michael: under the bank merger act, we have four categories of things, a big sure way that we look at. we look at the effects on competition. we look at financial and managerial opacity to effectuate their merger. we look at financial stability, and we look at convenience needs. convenience needs is a broad category that includes how well has the bank served its community. an important way to measure that is by their rating under the community reinvestment act. we want to see strong past performance.

then, banks also submit information about their plans going forward. are they going to close a bunch of branches in low income communities or open more? are they planning to serve low income communities better in the future or not? what kinds of products and services do they intend to keep or to grow in the merged institution? we take all of that into account in thinking about the convenience and needs of the community. we are not currently planning to do that. we have a pretty robust process that follows existing guidelines in this area. we are working with the other bank agencies and the justice department to see whether those should be updated, but that is work that we are thinking about on an interagency basis. rather than just us doing something. victoria: got it.

another thing i have to ask you about is raising capital requirements. you and chair powell have talked about you expect to see broad material changes. it seems like it will be a question about reissuing a proposal. the question is, is there a timeline by which you would like to make that decision? as to whether there will be a re-proposal? michael: we will take a very thoughtful approach, as we have taken all along. we gave the public extra time to comment on the rule because it is a big and complex rule. we are analyzing those now. there is external chatter about the rule, which i do not think is particularly helpful. there is the actual process itself, where we are getting good comments. i think we will be evaluating those and we want to make sure that we get the final rule right. we take comments seriously in all of our work. people say, do you really look

at comments, and the answer is yes, we look at them, we take them seriously. we got comments a few years ago on a stress test, for example, that we were not properly looking at the risk for certain low income housing tax credit properties. we were able to address that. we got comments more recently from the sba that we were not appropriately thinking about the kinds of risk profile of small business investment company projects.

we were able to update our approach so that we are appropriately thinking about the risk profiles. it is different from private equity investment. we had a similar issue with the tax credit. people said, you need to think differently for purposes of the investment test, and we were able to adjust for that. we take all the comments very seriously. we are taking these very seriously and i expect to make adjustments to the final rule. i think it will be a good and strong rule when it comes, but we will make changes along the way. victoria: this was many years

coming. it was finished in 2017. it took a while for the agencies to come to a rule. given the complexity of the rule and what it deals with, were you expecting that this would take some extra work after it came out? michael: we expected to get a lot of comments on the rule. to be expected to make adjustments to the rule and i do think that we will be doing that. victoria: a slightly different question. there was a report this morning that the fed had been resisting requirements for to disclose their green commitments, how they are trying to follow their green commitments. i wonder if you think that is the type of thing we should or should not have. michael: our job is financial stability. it is the safety and soundness of banks. we do have a role to play. we need to make sure that banks are looking at climate change, assessing their risk, measuring the risk and preparing for risk associated with climate change. we have been doing that in a couple of ways. we did that by issuing guidance to the largest banks.

thanks over 100 billion in size to make sure they are managing risks for climate change. this last year for the very largest banks, for six of them, we engaged in a climate scenario analysis to assess whether they were thinking methodically through these risk management issues. we are focused on it, but we do it within our mandate. it is important but narrow mandate. we are not making climate policy. we are just making sure that institutions that we supervise are looking at all of their material risks. including the risk for climate change. victoria: is there more to come on that scenario now? michael: we will have a report out of the analytics that we did from that and we will have further work that we expect we will do over the coming years.

day in and day out work, not flashy work and certainly not climate policy work, work that is focused on the way climate change might pose financial risk to banks. victoria: great. i will turn back to cra. back to your regularly scheduled programming. one of the things that is interesting about the new rule is that there is a focus on treating deposit products positively, not just credit products. can you talk about why you decided to do that? michael: this is an important area. they are treated positively for consideration under the rule because deposit products are so essential for low and moderate income households and businesses to get access to credit. that has always been the case.

we have always looked at the range of financial services that banks provide to low and moderate income households because they are related to each other. i have been studying financial access issues for more than a quarter of a century and i can tell you that deposit products are absolutely essential to be on the pathway to financial inclusion. victoria: there is the community development these as well. i know you are monitoring to see the extent to which those investments are increasing or decreasing. what is the analysis you are doing across banks, are you looking at the state level? what is that stick or the caret? if investments go down, do the

agencies take some sort of action? michael: i anticipate that under the revised rule or the final rule, that investments will go up around the country. we will be monitoring that. the rule takes a special account of those investment. they are given a kind of higher impact factor, say you are doing a low market credit deal, that has a higher impact. we will hear from community groups, is this the type of investment or transaction that should be given higher weight because it is harder to do? i think we will see investment rising. we will certainly be monitoring all aspects of the rule after it is implemented. we have two years from the announcement of the rule to implementation. we will be taking the two years,

the rule starts january 1, 2026, to work with civil rights groups, banks, examiners all together to make sure implementation is strong going forward. victoria: there has been some criticism from the rule about -- from the rule. there was a report a while back about how you look at bank performance in relation to each other. how is everyone's performance goes down, there is not necessarily everyone is doing. is there something in place to combat that? michael: we look at all kinds of metrics. how banks perform in relation to each other and we look at how banks perform in relation to the low and moderate income communities that they serve. right now there is a lot of room for improvement, i would say. if you look at large banks, banks over 100 billion in size, they account for about 9% by volume of mortgage lending to low to moderate income communities.

they account for about 16% overall of mortgage lending to all communities. if so why are the largest communities doing only 9% by volume of their lending to low and moderate income communities? that seems quite low. if you compare that to smaller banks, they are doing about proportional to the lending size. they provide 22% or 23% of originations overall for mortgage lending and they provide about 22% of lending to low and moderate income communities. so for the big banks, there is a lot of room for improvement and we will be looking for that under the new cra rules. victoria: that is really interesting. before we run out of time, since you were the vice chair, i want

to ask about the banking sector generally. we obviously had a banking crisis last year. how are the banks doing? what of the big risks you are watching right now? michael: i would say overall the banking system is sound and resilient. we are not seeing the kind of liquid pressures we saw in march, 2023. there are pockets of risk. we do have banks that are more under stress than others. we are looking at things like what is the level of unrealized losses on the baking sheets from securities, we are looking at banks that have particular kinds of concentration in commercial real estate. for example, commercial real estate covers a lot of different sectors. the office commercial real

estate sector is under stress more than other parts of the sector. so we are looking very carefully at banks with heavy concentrations in office commercial real estate where there are significant expected price declines is an example. we are always worried about and think about operational risk exposure. banks exposure to cybersecurity risk is a big operational risk and one that is a constant kind of threat to the system that we have to be careful and monitor. those are examples of some of the things on our minds right now. victoria: on the commercial real estate piece of it, is there a time period where once we have gotten through a certain year, we will know that we have made it through? michael: this is the kind of thing where it is likely to be a slow moving train.

as the financial sector and commercial real estate market move forward. commercial real estate properties refinance in a periodic cycle. they are not all done in one year or monmouth. -- or one month. they are refinance slowly over time. so in the next two or three years, we will see how properties deal with refinancing in a higher rate -- interest rate environment than the extremely low interest rate environment they were operating in pre-2019. some of those, we will keep penciling it out just fine. others in ways that are not problematic for banks that funded them because they have high levels of equity cushions. others will see losses on the loans so it will take time to work through. and we are operating in an environment that for office

commercial real estate in general, vacancy rates have increased. occupancy rates have lowered because of work from home. so for some categories of office cre, it means they are more exposed to risk. victoria: so you cannot say for certain when we are through it? [laughter] michael: it will take some time. as we say in fedland. [laughter] victoria: thank you. thank you so much to all of you. this has been a fascinating conversation. michael: thank you, victoria and thank you for all of you.