Community Reinvestment Act

Community Reinvestment Act (CRA)

The Community Reinvestment Act (CRA) is a federal law enacted in 1977 with the primary goal of encouraging banks and other financial institutions to meet the credit needs of the communities in which the operate, including low- and moderate-income neighborhoods. The CRA aims to combat redlining, a discriminatory practice where financial institutions refuse to provide services or offer credit to residents of certain neighborhoods based on their racial or ethnic composition. 

Under the CRA, banks are evaluated on their efforts to serve the credit needs of their entire community, particularly low- and moderate-income individuals and neighborhoods. These evaluations consider factors such as lending, investments, and services provided to underserved communities. 

Banks subject to the CRA are required to demonstrate their commitment to meeting the credit needs of all segments of their community by engaging in activities such as:

► Providing loans and financial services to low- and moderate- income individuals and neighborhoods. 

► Making investments in affordable housing, community development projects, and economic revitalization efforts.

► Offering banking services, including branches and ATMs, in underserved areas.

► Partnering with community organizations and local governments to address community development needs. 

The CRA is enforced by federal regulatory agencies, including the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). These agencies conduct regular examinations of banks to assess their compliance with the CRA and may take enforcement actions against institutions that fail to meet the law’s requirements.

Overall, the CRA plays a vital role in promoting fair and equitable access to credit and financial services for all members of society, while fostering economic development and stability in underserved communities.