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Community Reinvestment Act (CRA)
About
The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995 and updated again in August 2005.
The Fed, together with the other financial regulatory agencies, is currently considering what can be done to make CRA a more effective regulatory incentive going forward to address an unprecedented set of community needs in the wake of the foreclosure crisis. As part of this regulatory initiative, the agencies held CRA hearings and invited written comments on how to improve CRA in June 2010. In December, the agencies published amendments to the rule to encourage financial institutions to participate in activities aimed at revitalizing areas designated by the Department of Housing and Urban Development for funds under the Neighborhood Stabilization Program.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.
Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.
CRA examinations are conducted by the federal agencies that are responsible for supervising depository institutions. Information in this section is related to depository institutions that are examined by the Federal Reserve, mainly state-chartered banks that are members of the Federal Reserve. CRA information on other depository institutions is available from the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).
The Fed, together with the other financial regulatory agencies, is currently considering what can be done to make CRA a more effective regulatory incentive going forward to address an unprecedented set of community needs in the wake of the foreclosure crisis. As part of this regulatory initiative, the agencies held CRA hearings and invited written comments on how to improve CRA in June 2010. In December, the agencies published amendments to the rule to encourage financial institutions to participate in activities aimed at revitalizing areas designated by the Department of Housing and Urban Development for funds under the Neighborhood Stabilization Program.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.
Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.
CRA examinations are conducted by the federal agencies that are responsible for supervising depository institutions. Information in this section is related to depository institutions that are examined by the Federal Reserve, mainly state-chartered banks that are members of the Federal Reserve. CRA information on other depository institutions is available from the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).
