Community Reinvestment Act

Passed in 1977, the Community Reinvestment Act (CRA) is a federal statute that requires commercial banks and savings associations to serve the credit needs of low and moderate-income communities, consistent with safe and sound operation. Federal regulatory agencies enforce CRA by examining banking institutions for CRA compliance and taking CRA concerns into consideration when approving applications for new bank branches or for mergers and acquisitions.

Asset building advocates can use CRA as a tool to build community wealth and encourage safe and sound lending in low to moderate income communities. For example, a schedule of upcoming CRA exams is published every three months and advocates can provide relevant information to the regional office of the federal agency conducting the exam. Furthermore, citizens and community groups can also influence the process by submitting public comments when banks submit applications for mergers and acquisitions. Citizens’ and community groups’ active involvement can ensure that banks and thrifts of all sizes are accountable to their low-moderate income customers’ needs.

In addition, CRA can be an effective incentive for depository intuitions to build programmatic relationships with community groups, asset building coalitions, and other organizations that serve low to moderate income communities. Advocates can build relationships with CRA officers in their area to develop homeownership counseling, financial education, small business counseling, and other asset building programs.