Community Reinvestment Act of 1977 (CRA) -- requires financial institutions to meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods.
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The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was revised in May 1995.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.
Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.
Emily Patel is a Certified Financial Planner and Accredited Financial Counselor passionate about helping people take control of their finances. With 10 years of experience in financial coaching, she has helped hundreds of families eliminate debt, build emergency funds, and achieve financial stability. Emily holds a degree in Finance from UC Berkeley and believes financial wellness should be accessible to everyone.