what is the cra

The Community Reinvestment Act (CRA) is a federal law enacted in 1977 to encourage depository institutions to meet the credit needs of the communities in which they are located, including low- and moderate-income (LMI) neighborhoods. The CRA helps ensure that federally insured banks meet the credit needs of the communities in which they are located, consistent with safe and sound banking practices. The Federal Reserve and other federal banking regulators are responsible for encouraging financial institutions to help meet the credit needs of the communities in which they do business. The three federal banking agencies responsible for the CRA are the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), and the Office of the Comptroller of the Currency (OCC) . Banks that have CRA obligations are supervised by one of these three regulators. The Federal Reserve supervises state member banks for CRA compliance. To carry out its role, the Federal Reserve examines state member banks to evaluate and rate their performance under the CRA, considers banks CRA performance in context with other supervisory information when analyzing applications for mergers, acquisitions, and branch openings, and shares information about community development techniques with bankers and the public. Examiners conduct lending, investment, and service tests to evaluate banks’ performance in their respective assessment areas. Upon conclusion of CRA examinations, examiners must prepare a written evaluation of the institutions record of meeting the credit needs of its assessment area. CRA performance ratings are available online and upon request at local bank branches.