What is the Community Reinvestment Act?

The Community Reinvestment Act (CRA) is a federal law that encourages banks and other financial institutions to offer financial services to low- and moderate-income individuals in Washington and in other states. The law was put in place to reduce income disparities in the delivery of credit and other services. The CRA also seeks to increase access to financial services in areas where there is traditionally limited access, known as "underserved" areas. The CRA requires banks and other financial institutions to meet the credit needs of the populations they serve, including low- and moderate-income individuals and the underserved communities. Banks are evaluated on how well they do in meeting the credit needs of these groups and are assigned ratings based on the performance. If banks do not meet the credit needs of these populations, they can be subject to penalties or other regulatory action. The CRA provides an opportunity for local governments in Washington and other states to work with financial institutions to increase access to financial services. It also encourages collaboration between community organizations and banks to create financial products tailored to the needs of low- and moderate-income individuals. Overall, the Community Reinvestment Act is an important law that encourages banks and other financial institutions to provide services to those in low- and moderate-income communities and underserved areas. This law provides an opportunity to reduce income disparities and increase access to banking services.

Related FAQs

What is the Right to Financial Privacy Act?
What is the Bank Holding Company Act?
What is the Home Ownership and Equity Protection Act?
What are the general principles of banking law?
Are there any regulations governing ATM use?
What is the Electronic Signatures in Global and National Commerce Act?
What is the Fair Debt Collection Practices Act?
How does the Sarbanes-Oxley Act affect bank governance?
What is the Investment Company Act?
What is the federal Bank Holding Company Act?

What is the Community Reinvestment Act?

Related FAQs

Related Blog Posts