The Community Reinvestment Act Decoded

We answer your questions about the act itself, which community development programs meet its requirements and how to participate if you're in the Second District.

Community Reinvestment Act 101
What is the Community Reinvestment Act?

The Community Reinvestment Act (CRA) was enacted to encourage banks to meet the credit needs of the neighborhoods in which they operate, including low- and moderate-income (LMI) communities. The CRA was enacted by Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995 and in August 2005.

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Who is responsible for CRA compliance?

The Federal Reserve System (FRS), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) evaluate how banks are fulfilling the objectives of the CRA.

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What tests do examiners perform to evaluate banks regarding the CRA?

Examiners conduct lending, investment and service tests to evaluate banks’ performance in their respective assessment areas.

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What is an assessment area?

An assessment area is determined based on where banks have branches and deposit-taking ATMs or surrounding geographies in which they have originated or purchased loans. All evaluations are customized to reflect the characteristics and asset size of depository institutions.

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Which bank activities are eligible to receive credit under the CRA?

In order to receive credit under the CRA, loans, investments and services made by banks must have a primary purpose that generally improves the circumstances for low- and moderate-income families or individuals as well as stabilizes and/or revitalizes their neighborhoods.

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Do all banks have the same CRA responsibilities?

Banks’ responsibilities regarding the CRA depend on their asset size. CRA categorizes banks as small, intermediate-small and large. The CRA also distinguishes limited-purpose and wholesale institutions. The Federal Financial Institution Examination Council (FFIEC) explains asset-size thresholds.

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How does the CRA define low- and moderate-income communities?

CRA classifies as low-income those geographies having a median family income of less than 50 percent of the area median income, and moderate-income those geographies having a median family income of at least 50 percent and less than 80 percent of the area median income. The Federal Financial Institution Examination Council (FFIEC) publishes annual reports on median family income.

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How do examiners measure performance?

After conducting assessments of banks’ CRA activities, studying factors such as local demographic and economic indicators and talking to community contacts, examiners issue performance ratings. Banks can receive the following ratings: Outstanding, Satisfactory, Needs to Improve and Substantial Noncompliance.

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How are the ratings used?

The ratings are considered when banks request to merge with other financial institutions or plan to expand to other locations. The ratings and overall performance evaluations are made available to the public.

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What is a public evaluation?

Upon conclusion of CRA examinations, examiners must prepare a written evaluation of the institution's record of meeting the credit needs of its assessment area. This written evaluation is public information and can be obtained through the institution or its supervisory agency. While the content of the Public Evaluation might vary depending on the nature of the institution examined and the assessment method used, the public portion of the evaluation generally contains the following information:

  • The institution's CRA rating
  • A description of the financial institution
  • A description of the financial institution's assessment area
  • Conclusions regarding the financial institution's CRA performance, including the facts, data and analyses that were used to form such conclusions
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Community Development
Which activities may be considered to support community development under CRA?

Activities that are considered to support community development according to the CRA include: investments in community services such as affordable housing and child care, revitalization of distressed geographies or designated disaster areas, and promoting economic development by providing financing to small businesses or farms. The Interagency Questions and Answers Regarding Community Reinvestment provides the latest guidance on how the regulation is applied in the field.

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Does the CRA offer credit for workforce development programs?

The regulation also includes examples of initiatives that promote permanent job creation, retention and improvement. Regulators have added to the definition of community development activities those that incorporate requirements for creating or improving access to workforce development and job training programs for low- and moderate-income or unemployed individuals.

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Does the CRA offer credit for financial inclusion programs?

Banks may meet the criteria for CRA consideration in the lending, investment and services tests for offering financial inclusion programs. Activities that receive consideration include educational programs for low- and moderate-income families or loans and investments that incorporate a financial capability component.

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In the Second District
Can you submit comments on banks’ CRA performance?

The public is encouraged to submit comments on how banks are meeting the credit needs of their communities. These comments are taken into consideration during the bank’s next CRA examination.

How can you comment on banks’ CRA performance?

Submit comments on the following websites:

For banks supervised by the New York Fed, submit comments here.

How can you learn about banks’ CRA performance?

A copy of the public section of the most recent CRA performance evaluation must be placed in a bank's public file. The public is entitled to request a copy in any branch. For banks supervised by the New York Fed, use this tool.

Where can you find out what a bank’s CRA ratings are?

Visit the FFIEC Interagency CRA Rating Search tool. For banks supervised by the New York Fed, use this tool.

Have a Question?

If you didn't find an answer to your question on the left, contact us.

Adrian Franco, Ph.D.
Officer & Director
212-720-7499
adrian.franco@ny.frb.org

Chelsea Cruz
Program Manager
212-720-7969
chelsea.cruz@ny.frb.org

Sanjay Sudhir
Senior Research Analyst
212-720-5393
sanjay.sudhir@ny.frb.org