What is the Community Reinvestment Act?
The Community Reinvestment Act (CRA) is a federal law that came into effect in 1977 and is designed to promote investments in low-income and underserved areas in Washington. The Act requires banks, savings and loans, and other financial institutions to meet the needs of their local communities for services, including access to banking services and credit. This includes encouraging financial institutions to make loans to people who are underserved in their community, such as small businesses, minorities, and low-income households, in an effort to address issues of historical discrimination in the banking industry. The CRA also encourages banks to invest in their local communities to help address economic and social needs that might otherwise be overlooked. This includes investing in businesses and organizations that provide services to underserved communities, investing in affordable housing initiatives, and providing grants and loans to businesses and individuals in low-income areas. The Act is enforced by the Office of the Comptroller of the Currency, in conjunction with the Federal Deposit Insurance Corporation and the Federal Reserve. They monitor banks to ensure that they are meeting their obligations under the Act, and can take action against those who are not. In addition, the Act provides a mechanism for community groups or others to challenge banks that are not meeting their obligations under the Act.
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