October 12, 1977 - Community Reinvestment Act

Policy Name: Community Reinvestment Act of 1977, Title VIII of the Housing and Community Development Act of 1977 (H.R. 6655)

Date: Effective October 12, 1977

Passed as Title VIII of the Housing and Community Development Act of 1977, the Community Reinvestment Act (CRA) sought to encourage lending institutions to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congressional sponsors designed CRA to help combat the practice of redlining, through which lenders refuse to grant loans to borrowers residing in certain neighborhoods. In the United States, redlined areas often contained high concentrations of minority communities. The CRA applies to all lending institutions that receive FDIC deposit insurance—in effect requiring that in exchange for federal insurance, banks must serve the full community in which they are located.

Three regulators enforce the CRA: the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System. These regulators supervise banks with CRA obligations and assign ratings to each bank based on how well the bank fulfills its obligations to low- and moderate-income communities. The relevant regulator then uses a bank’s CRA score in its evaluation for future approval of bank mergers, charters, acquisitions, branch openings, or deposit facilities.