What is the Community Reinvestment Act?

The Community Reinvestment Act (CRA) is a federal law that was passed in 1977 in order to promote the availability of banking services to everyone, regardless of income level or geographic location. It is also known as the Home Mortgage Disclosure Act (HMDA). The CRA encourages banks to lend to low- and moderate-income individuals, to increase the availability of banking services in underserved areas, and to prevent discrimination in lending. In California, the CRA requires banks to meet certain performance standards for the loan products and services that they offer, such as the number and types of loans that the bank makes in low- and moderate-income neighborhoods, and other activities related to community development. Banks must demonstrate that they are meeting these performance standards in order to be eligible for certain regulatory approvals, such as moving or opening a new branch. The CRA is also responsible for the creation of Community Development Financial Institutions (CDFIs), which are specialized banks that provide financial services to low- and moderate-income individuals in under-served communities. CDFIs help to increase access to banking services, such as lending, savings, and other financial products in these communities. Overall, the Community Reinvestment Act helps to promote and maintain access to banking services for everyone, regardless of income level or geographic location. It increases the availability of banking services in underserved areas, and helps to prevent discrimination in lending practices. In California, this is accomplished through the enforcement of performance standards and the creation of CDFIs.

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What is the Community Reinvestment Act?

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