In 1977, concerned about the denial of credit to lower income communitiesboth minority and whiteCongress enacted the Community Reinvestment Act (CRA). CRA states that "regulated financial institutions have [a] continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered." The statute goes on to require that federal bank regulators both "assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of such an institution" and "take such record into account in its evaluation of an application for a deposit facility by such institution." Institutions are given one of four ratings, from Outstanding to Substantial Noncompliance, and examination reports (called Public Evaluations) are made public.
In the 30 years since its enactment, CRA has generated major changes in the manner in which banks and thrifts view and serve low- and moderate-income communities and consumers. Billions, perhaps trillions, of dollars of credit and investment has come into these communities spurred, incented, or directed by the Act and collateral laws such as the Home Mortgage Disclosure Act (HMDA), various anti-discrimination statutes, and obligations placed on Fannie Mae and Freddie Mac. And while there was a time when those subject to CRA complained bitterly about it, in general that time has passed.