Community Reinvestment Act

The Community Reinvestment Act (CRA) 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, consistent with safe and sound operations. It was enacted by Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228).

The CRA requires that each depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically by the appropriate federal financial supervisory agency. A bank’s CRA performance record is taken into account when considering an institution’s application for deposit facilities.

How does the CRA work? 

The regulators evaluate a bank’s performance in its assessment areas. Assessment areas are geographic areas defined by the bank where the bank maintains deposit-taking facilities, such as branches or ATMs. CRA evaluations focus on how well banks serve their assessment areas, particularly LMI neighborhoods within their assessment areas. 

In evaluating a bank’s CRA performance, the agencies consider three main criteria: (1) the bank’s lending to LMI individuals, businesses, and geographies; (2) the bank’s investment in community development projects; and (3) the banking services (including branch locations and online banking) and community development services offered by the bank. The number of criteria vary by bank size, for example, with smaller banks evaluated just on retail lending. 

Public involvement is also a key component of the CRA. Community organizations and individuals are encouraged to provide input to the agencies during the CRA evaluation process, which informs the evaluations, and allows communities to help shape their financial future.

Why is the CRA important?

The CRA plays a critical role in building stronger communities. For example, banks may receive CRA credit for:

• Lending to, and investing in, projects that create affordable housing in LMI areas;
• Making loans to LMI individuals and in LMI areas to support homeownership;
• Lending to small business owners who may rely on financing to grow their business, create jobs, and contribute to local economic development; and
• Providing access to branches, ATMs, and retail banking services to LMI individuals and in LMI areas.

In all, the CRA remains a vital tool to help meet the credit needs of communities across the nation.

• Federal Deposit Insurance Corporation (FDIC)
• Office of the Comptroller of the Currency (OCC)

Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).

For an interactive look at the history of the CRA, explore this timeline.