The Community Reinvestment Act (CRA), enacted in 1977, turned 40 in October.
"The CRA basically encourages bank lending, investment and service activities in low- and moderate-income (LMI) neighborhoods," said Community Development Advisor Ariel Cisneros, who works on identifying and meeting the CRA informational needs of bankers, community organization representatives and government officials in the Tenth District.
Along with providing resources to emerging CRA partnerships and opportunities, the Federal Reserve System also plays an important role in implementing the CRA by conducting examinations to regularly assess banks' records in terms of meeting local credit needs and requires those records to be taken into account when institutions apply for branches, mergers, acquisitions and other applications that require regulatory approval.
"We work closely with our colleagues in Consumer Affairs that examine banks for their CRA and other consumer compliance," Cisneros said.
Over the past 40 years, the financial landscape has changed significantly, and these changes have affected the coverage, process and structure of the CRA and financial institutions; effectiveness in meeting the goals of the Act. Community Reinvestment Act coverage now includes consumer and business lending, community investments, and low-cost services that would benefit LMI areas and entities.
Since the CRA's enactment, public-private partnerships have blossomed, allowing banks to work with local governments to address some of the more difficult community and economic development problems in their communities.
"These partnerships have successfully leveraged capital by offering credit enhancements that help make private investment possible," Cisneros said.
As a way of commemorating the CRA's anniversary, the Kansas City Fed is highlighting CRA OneSource, a one-stop resource for CRA tools, templates, videos and guides.
CRA OneSource is designed to assist bankers and community leaders. The OneSource website is a valuable resource for those new to or unfamiliar with the CRA. All materials on CRA OneSource are developed by the Federal Reserve Banks, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Federal Financial Institutions Examination Council.
Learn more about CRA OneSource and related resources.