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Community Reinvestment Act

The Community Reinvestment Act (CRA) requires banking regulators to assess bank and savings associations’ record of helping to meet the credit needs of the communities in which they are chartered. Regulators must also consider an institution’s CRA record when evaluating certain corporate applications.

The Community Reinvestment Act was enacted in 1977 with a worthy goal of encouraging banks to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.

To accomplish this objective, CRA requires banking regulators to assess banks’ record of helping to meet the credit needs of the communities in which they are chartered. Regulators must also consider an institution’s CRA record when evaluating certain corporate applications. In 2022, banks provided more than $227 billion in capital to low- and moderate-income (LMI) communities in the form of mortgages and small business loans, and an additional $151 billion in community development loans.

In October 2023, the federal banking agencies adopted major changes to the rules implementing CRA. Some aspects of the new rule—particularly as it relates to clarifications regarding activities that count for CRA credit— are long overdue. However, other aspects of the new rule exceed the agencies’ statutory authority or are overly complex. In some instances, regulators did not articulate a rationale for their policy choices.

A limited number of the rule’s provisions will become effective in 2024, but the majority of requirements will be effective in 2026. Banks must report data under the rule in 2027. Regulators will issue additional implementation guidance in the months ahead.

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Krista Shonk

Krista Shonk

SVP & Senior Counsel, Regulatory Compliance & Policy

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