The Community Reinvestment Act
The Community Reinvestment Act (CRA) was enacted in 1977 to eliminate redlining and to expand credit access to all communities, including low-moderate income earning neighborhoods. The CRA strengthened the expectation that banks serve the convenience and needs of local communities. Currently, the CRA requires Federal financial institutions, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve, and the Federal Deposit Insurance Corporation to assess and evaluate the record of each bank in its ability to fulfill community obligations and to consider the record of evaluating applications for charters, bank mergers, branch openings, and acquisitions. In May 2022, the Federal Reserve Board, the FDIC, and the OCC announced that they wanted to adopt changes to strengthen and modernize regulations in the CRA. CRA reform is a critical tool for improving racial inequality among communities of color. By holding banks accountable to the financial demands of local communities, particularly low-moderate income earning communities. The CRA is one of the most important federal policies for affordable housing and community development financing, generating hundreds of billions of dollars in loans and equity investments every year. The CRA is responsible for 75% to 85% of annual investor demand for the federal Low-Income Housing Tax Credit (LIHTC) incentive. Among our National Housing Resource Center comments were the following proposals specific to housing counseling: Recognizing lender fee-for-service payments for housing counseling services by HUD approved housing counseling agencies as an eligible activity under the Community Reinvestment Act. This eligible activity provides significant value for the underserved population, especially low-moderate income people and people of color. While lenders recognize the value of HUD approved housing counseling agencies in addressing the troubling and persistent gaps in [...]