Community Reinvestment Act

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Community Reinvestment Act (CRA)

Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations.

Community Reinvestment Act

A 1977 U.S. law encouraging banks and other lending agencies to extend credit to low and moderate income persons wishing to buy a home. The original contained no penalties, but prohibited lending institutions from discriminating against a potential homeowner based on where he/she lives. Regulatory changes in 1995 and legislative amendment in 1999 are often blamed for encouraging banks to make excessively risky loans in exchange for the ability to offer investment and insurance services. Because of this, some believe the CRA is responsible for the housing bubble that contributed to the recession that began in 2008. See also: Credit Crunch, Gramm-Leach-Bliley Act

Community Reinvestment Act (CRA)

An act passed by Congress in 1977 to encourage financial institutions to meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. Compliance is monitored via regular audits,and a poor record of CRA compliance is taken into consideration when the financial institution applies for deposit facilities,including mergers and acquisitions.

One may find a financial institution's rating for CRA compliance by visiting the Web sites of the various regulatory agencies that track compliance.A financial institution may appear on one list but not others, depending on which agency has responsibility for that bank and its CRA compliance. The possibilities are

Federal Reserve Board (www.federalreserve.gov)
FDIC (www.fdic.gov)
Office of Comptroller of the Currency (www.occ.treas.gov)
Office of Thrift Supervision (www.ots.treas.gov)

 

References in periodicals archive ?
The Community Reinvestment Act of 1977 was enacted by Congress to encourage financial institutions to meet the credit needs of all the communities in which they operate, especially low-to-moderate income neighborhoods.
The Community Reinvestment Act of 1977 encouraged commercial banks and savings associations to meet the needs of all segments of communities.
Beginning with the Community Reinvestment Act of 1977, the political system helped create this mess," Michael Novak, a one-time supporter of CRA and other community-based efforts to support neighborhoods, wrote in First Things earlier this year.
Require financial institutions to give back to their communities by providing student loan offerings to low-income communities as part of their community reinvestment obligations as is the case for banks under the Community Reinvestment Act of 1977.
The Board has long held that consideration of the convenience and needs factor includes a review of the records of performance of the relevant depository institutions under the Community Reinvestment Act of 1977 (the "CRA").
Each lucky winner has to submit a Community Support Statement to the board, detailing various aspects of the bank's performance as a community lender, including lending to first-time home buyers and, in some cases, performance under the Community Reinvestment Act of 1977.
Congress asked the Board of Governors of the Federal Reserve System to conduct a comprehensive study of loans made under the Community Reinvestment Act of 1977.
They included: More active local government in housing assistance programs that still involved federal funding through various grant programs such as Community Development Block Grants; Better organized and more motivated community development organizations; More reliance on the ability to raise low-cost capital through state and local housing finance agencies, primarily through tax-exempt bonds; Development of mechanisms by banks and thrifts to meet the legislative requirements of the Community Reinvestment Act of 1977 for greater investment in low-income communities; and Expanded use of local government regulatory powers directed to encourage inclusion of affordable and low-income housing in new developments.
Wynn is trying to persuade the Comptroller of the Currency, Eugene Ludwig, to include the bill as part of the Community Reinvestment Act of 1977, which requires banks and thrifts to meet the credit needs of the communities they serve.
Also, loans to and equity investments in LIHC projects qualify toward satisfying a financial institution's obligations under the Community Reinvestment Act of 1977 (CRA).
The Community Reinvestment Act of 1977 requires banks to meet the credit needs of all the communities where they do business within the United States, especially low- and moderate-income communities and families.
If a state member bank, or any insured depository institution affiliate of the bank, has received less than a "satisfactory" rating in meeting community credit needs in its most recent examination under the Community Reinvestment Act of 1977 (12 U.

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