Community Reinvestment Act - CRA

Referring to the The GLBA, enacted November 12, 1999, The Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements."

This meant that banks would be denied the ability to expand through merger, acquisition or branching unless each party received a good rating from the Community Reinvestment Act ... people.

The CRA 'people' are:
The Federal Reserve
The Federal Deposit Insurance Corporation (FDIC)
The Office of the Comptroller of the Currency (OCC)
The Office of Thrift Supervision (OTS)
and finally The Federal Financial Institutions Examination Council (FFIEC) coordinates the CRA efforts of these four. (The FFIEC's website hasn't been updated since 2007.)

The CRA was originally signed into law by President Jimmy Carter in 1977. It's purpose was to reduce discrimination in the credit and housing markets. You had:

• The Fair Housing Act of 1968 - to prohibit discrimination on the basis of race, sex, or other personal characteristics.


• The Equal Credit Opportunity Act of 1974 - same thing - to prohibit discrimination on the basis of race, sex, or other personal characteristics.


• The Home Mortgage Disclosure Act of 1975 - required that financial institutions publicly disclose mortgage lending and application data.


• The Community Reinvestment Act of 1977 - to ensure the provision of credit to all parts of a community, regardless of the relative wealth or poverty of a neighborhood.

In writing the CRA, Congress apparently didn't say how to ensure that banks and savings associations serve the credit needs of their local communities - the law just said to do it. And little by little, community groups organized to take advantage of their right under the Act to complain about law enforcement of the regulations.

To me, it's kind of like Congress told the banks to make their neighborhood people happy, and the people lined up at the banks, saying "Ok, it's a law now - make us happy." But how? The obvious answer was to make loans to people who otherwise wouldn't have qualified to borrow money - or buy a house. Because the "relative wealth or poverty of a neighborhood", in my opinion, can only be determined by the people who occupy it.