Community reinvestment

Community Reinvestment Act

Other short titles	Indian and Alaska Native Community Development Act
Long title	An Act to amend certain Federal laws pertaining to community development, housing, and related programs.
Nicknames	Housing and Community Development Act of 1977
Enacted by	the 95th United States Congress
Effective	October 12, 1977
Citations
Public law	95-128
Statutes at Large	91 Stat. 1111
Codification
Titles amended	42 U.S.C.: Public Health and Social Welfare
U.S.C. sections amended	42 U.S.C. ch. 69 § 5301
Legislative history
Introduced in the House as H.R. 6655 by Henry S. Reuss (D–WI) on April 26, 1977 Committee consideration by House Banking, Finance, and Urban Affairs, Senate Banking, Housing, and Urban Affairs Passed the House on May 11, 1977 (369-20) Passed the Senate on June 7, 1977 (79-7, in lieu of S. 1523) Reported by the joint conference committee on September 26, 1977; agreed to by the Senate on October 1, 1977 (54-19) and by the House on October 4, 1977 (384-26) Signed into law by President Jimmy Carter on October 12, 1977

The Community Reinvestment Act (CRA, P.L. 95-128, 91 Stat. 1147, title VIII of the Housing and Community Development Act of 1977, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.

The Act instructs the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation () To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions ()

The Community Reinvestment Act of 1977 sought to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per and ) in all communities in which they are chartered to do business. The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.

The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.

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