What Is the Community Reinvestment Act (CRA)?

Key takeaways
* The CRA is a federal law passed in 1977 that requires federally insured depository institutions to help meet the credit needs of the communities where they operate, including low- and moderate-income (LMI) neighborhoods.
* Federal banking agencies evaluate banks’ community lending, investment, and service performance and factor those evaluations into applications for mergers, branch openings, and other regulatory approvals.
* The CRA does not impose hard lending quotas; evaluations combine data and qualitative review. Updated rules introduced a more metrics-based approach and new reporting requirements that phase in beginning in 2026–2027.

Purpose and historical context

The CRA was enacted to address discriminatory lending practices—most notably redlining—where neighborhoods with high concentrations of racial and ethnic minorities were denied mortgage credit and investment. Redlining, driven in part by Home Owners’ Loan Corporation (HOLC) maps in the 1930s, produced long-term disinvestment: many formerly “redlined” areas remain low- or moderate-income and disproportionately minority today.

The CRA’s core objective is to ensure that banks serve all parts of their communities responsibly and equitably, helping expand access to credit, banking services, and community investment.

How the CRA works

• Oversight: Three federal agencies share CRA oversight—the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve Board.
• Evaluations: Regulators review banks’ lending, investment, and service activities. Reviews use both data and qualitative analysis; banks are assessed on how well they address community credit needs consistent with safe banking practices.
• Ratings: Institutions receive one of four ratings: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. Ratings are publicly available (for example, via the FDIC’s database) and must be made available to consumers upon request.
• Coverage: The CRA applies to FDIC-insured depository institutions (national and state-chartered banks and savings associations). Federally insured credit unions and many non-bank lenders are generally exempt.

Criticisms and debate

Critics have argued the CRA encouraged risky lending practices that contributed to the 2008 financial crisis. Subsequent research indicates CRA-related loans were a small share of the risky subprime lending that occurred, suggesting the law was not a primary cause of the crisis.

Other criticisms focus on effectiveness and modern relevance: some studies show non-bank lenders provided similar levels of credit in LMI areas, and others say the CRA’s emphasis on branch locations is outdated as banking shifts online.

Modernization efforts

Regulators have been revising CRA rules to reflect changes in banking (digital services, consolidation) and to increase clarity and consistency. Key features of recent updates include:
* A more metrics-driven evaluation framework.
* Expanded consideration of online and non-branch activity.
* Enhanced transparency and data reporting.

Most provisions of the interagency final rule were scheduled to begin in 2026, with additional data and reporting requirements phased in by 2027.

Related fair-lending concepts (brief FAQs)

What are the main U.S. fair-lending laws?
* Fair Housing Act (1968), Equal Credit Opportunity Act (1974), Home Mortgage Disclosure Act (1975), and the Community Reinvestment Act (1977) together form the core federal framework prohibiting discriminatory lending.

What was redlining?
* Redlining was the practice of denying or limiting financial services to neighborhoods based on racial or ethnic composition. It was institutionalized through assessment maps that labeled predominantly minority neighborhoods as hazardous for investment.

What may lenders legally consider?
* Lenders may consider only factors relevant to creditworthiness (ability to repay), such as income, credit history, and collateral. It is illegal to base lending decisions on race, color, religion, national origin, sex, marital status, age, or public assistance status.

How did redlining affect the wealth gap?
* By restricting access to home loans and investment, redlining blocked pathways to homeownership and generational wealth accumulation for many minority communities, contributing to persistent disparities in income and wealth.

If you suspect discrimination
* Housing or lending discrimination is illegal. Complaints can be submitted to federal agencies such as the Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Housing and Urban Development (HUD).

Bottom line

The Community Reinvestment Act was designed to combat discriminatory lending and encourage banks to serve all communities, particularly low- and moderate-income neighborhoods. While debates continue over its effectiveness and role in past lending crises, recent regulatory updates aim to modernize CRA evaluation to reflect digital banking, improve transparency, and ensure that reinvestment reaches communities in need.