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Consumer Compliance Perspective: Another Redlining Risk Resource

Supervision News Flash
March 2023
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Beginning in December 2022, the Federal Reserve launched a new resource designed to help lenders understand the Metropolitan Statistical Area (MSA) boundary and demographic composition changes that occurred because of the 2020 Decennial Census updates. View resources and a recording of the December 6, 2022, Federal Reserve Consumer Compliance Outlook Live event for more details.

In accordance with the 2009 Interagency Fair Lending Examination Procedures, redlining risk is evaluated for each Federal Reserve supervised institution. Redlining risk factors include assessment areas, lending disparities, branching, marketing and outreach, and overt statements and complaints.  Changes made to MSA configurations resulting from the 2020 Decennial Census Data impacts each of these factors, except for overt statements and complaints.

The Federal Reserve is making available Census Reports by MSA in order to help lenders and the public understand boundary and demographic composition changes. The reports allow readers to understand the comparison between the 2011–2015 American Community Survey (ACS) 5-Year estimates and the 2020 Decennial Census data. Find reports for each of the 384 MSAs. These reports, along with bank specific data, should be used to evaluate any changes associated with redlining risk factors, including branch locations and assessment areas. 

The reports contain two sets of maps for each MSA so that more than one definition of minority population (Black/Hispanic and All Minority) can be visualized and to identify Majority-Minority Census Tract (MMCT) using both definitions of minority population. As part of consumer compliance examinations, the Federal Reserve typically conducts initial redlining risk analysis defining MMCTs as those that are majority Black/Hispanic unless specific facts indicate that using an All Minority definition is warranted. There could be circumstances in which other definitions of MMCT are appropriate, for example if the market areas include American Indian Reservations. In such cases, the Federal Reserve may also conduct additional analysis of the market with one or more additional MMCT definitions.

Here at the Richmond Fed, our Consumer Affairs Central Points of Contacts are available to discuss any questions you may have regarding the reports.