Ethan Riley
The Community Reinvestment Act (CRA), enacted in 1977, requires banks to meet the credit needs of the communities in which they operate, including low- and moderate-income neighbourhoods. The CRA applies to depository institutions insured by the FDIC and state-chartered banks that are part of the Federal Reserve System. Banks are evaluated on their CRA performance and receive ratings based on their compliance, which is considered when reviewing applications for mergers, acquisitions, and branch openings. CRA examinations are conducted by federal agencies like the Federal Reserve and the FDIC. Banks are subject to data collection and reporting requirements, including information on business loan applicants and small business loan applicants' demographics. The CRA aims to promote equitable access to credit for all communities and ensure that financial institutions serve the needs of their diverse customer base.
| Characteristics | Values |
|---|---|
| Name of the Act | Community Reinvestment Act (CRA) |
| Year enacted | 1977 |
| Purpose | Encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighbourhoods |
| Regulatory bodies | Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of Currency (OCC) |
| Institutions regulated | Depository institutions, state-chartered banks, national banks, federal savings associations |
| Data collection requirements | Collect and report data on all applications for credit, regardless of outcome; information on business loan applicants in CRA assessment areas; data on small business loan applicants' demographics |
| Reporting schedule | Annual reporting schedule for Section 1071; Section 76.16 data submitted upon request |
| Public comments | Considered by OCC in a bank's evaluation |
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What You'll Learn
The Community Reinvestment Act (CRA)
Three federal banking agencies, or regulators, are responsible for the CRA and banks with CRA obligations are supervised by one of these three regulators. The Federal Reserve supervises state member banks or state-chartered banks that are part of the Federal Reserve System for CRA compliance. The CRA performance evaluation (PE) includes a description of the institution and its assessment area(s), conclusions about the bank's performance in each of its assessment areas, and the facts, data, and analyses supporting the bank's conclusions and ratings.
Banks receive an overall rating as well as ratings based on their CRA performance in each state they operate in. CRA examinations are conducted by the federal agencies that supervise depository institutions: the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). All institutions regulated by the OCC, Federal Reserve, and FDIC that meet the asset size threshold are subject to data collection and reporting requirements.
The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. This record is considered when an institution applies for deposit facilities, including mergers and acquisitions. Interested parties may submit comments on a bank's CRA performance to the bank directly or the appropriate OCC Supervisory office. All public comments received before the close of the CRA examination will be considered in a bank's evaluation.
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CRA performance evaluation (PE)
The Community Reinvestment Act (CRA), enacted in 1977, requires federal banking regulators to encourage financial institutions to meet the credit needs of the communities they serve, including low- and moderate-income (LMI) neighbourhoods. The CRA applies to depository institutions that carry FDIC deposit insurance.
The CRA performance evaluation (PE) includes a description of the institution and its assessment area(s), conclusions about the bank's performance in each area, and the facts, data, and analyses supporting the conclusions. CRA ratings and PEs are maintained by the FFIEC. The CRA statute establishes a four-tiered rating system, and banks receive an overall rating as well as ratings based on their performance in each state they operate in. They also receive a rating for multistate metropolitan areas where they have branches in two or more states.
The Office of the Comptroller of the Currency (OCC) evaluates a financial institution's activities under the CRA according to performance tests and standards based on information about the institution and the community it serves. The OCC assesses a national bank's record of helping to meet the credit needs of its entire community, including LMI neighbourhoods. The OCC considers this record when evaluating applications for new branches, relocations, mergers, and other corporate activities. The OCC conducts a CRA examination of a national bank every three to four years, with an extended cycle for smaller banks.
Interested parties may submit comments on a bank's CRA performance to the bank directly, the appropriate OCC Supervisory office, or by email or mail. All public comments received before the close of the CRA examination will be considered by the OCC in the bank’s evaluation. The OCC's CRA Database contains banks' CRA evaluations and ratings.
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CRA data collection and reporting
The Community Reinvestment Act (CRA), enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighbourhoods. The CRA applies to depository institutions that carry FDIC deposit insurance.
The CRA data collection and reporting requirements are as follows:
Data Collection
State-chartered banking institutions are required to collect and report data obtained from all business loan applicants. This includes all applications for credit, regardless of the outcome. The data collected includes information on the sex of principal owners and the LGBTQI+-owned status of small business loan applicants. However, it is important to note that this does not apply to loans made to non-profit organisations, government agencies, or publicly traded companies.
Reporting
The CRA performance evaluation (PE) includes a description of the institution, its assessment area(s), conclusions about the bank's performance in each area, and the facts, data, and analyses supporting these conclusions. The PE is conducted every three to four years for national banks, with an extended cycle for smaller banks. The CRA also requires that each insured depository institution's record in helping meet the credit needs of its community be evaluated periodically, and this is considered when reviewing applications for deposit facilities, mergers, and acquisitions.
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CRA examinations
The Community Reinvestment Act (CRA), enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighbourhoods. The CRA applies to depository institutions that carry FDIC deposit insurance and does not apply to special purpose banks, such as bankers banks and banks that provide cash management controlled disbursement services.
The Office of the Comptroller of the Currency (OCC) is the federal regulator responsible for conducting CRA examinations of national banks and federal savings associations. The OCC conducts a CRA examination of a national bank every three to four years, with an extended examination cycle for smaller banks. The CRA performance evaluation (PE) includes a description of the institution and its assessment area(s), conclusions about the bank's performance in each of its assessment areas, and the facts, data, and analyses supporting the bank's conclusions and ratings.
The OCC releases a list of national banks to be examined under the CRA in the next two calendar quarters each quarter. This announcement allows interested parties to file public comments about the banks' performance under the CRA. These comments can be submitted to the bank directly, the appropriate OCC Supervisory Office, or by email at [email protected]. All public comments received before the close of the CRA examination will be considered by the OCC in the bank's evaluation.
The CRA statute establishes a four-tiered rating system, and banks receive an overall rating as well as ratings based on their performance in each state and multistate metropolitan areas where they have branches. The OCC's CRA Database provides information on a bank's CRA evaluations and ratings.
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CRA and depository institutions
The Community Reinvestment Act (CRA) was enacted in 1977 to encourage depository institutions to meet the credit needs of the communities in which they operate, including low- and moderate-income (LMI) neighbourhoods. The CRA requires that the records of insured depository institutions in helping meet the credit needs of their communities be evaluated periodically. The CRA applies to depository institutions that carry FDIC deposit insurance and does not apply to special purpose banks or banks that provide cash management services, or serve as correspondent banks, among other exceptions.
The CRA provides a framework for financial institutions, state and local governments, and community organizations to jointly promote banking services to all members of a community. Three federal banking agencies are responsible for the CRA and banks with CRA obligations are supervised by one of these regulators. The Federal Reserve supervises state member banks for CRA compliance. The CRA performance evaluation (PE) includes a description of the institution and its assessment area, conclusions about the bank's performance in each of its assessment areas, and the facts, data, and analyses supporting the conclusions and ratings.
The Office of the Comptroller of the Currency (OCC) evaluates a financial institution's activities under the CRA according to the performance tests and standards set forth in the CRA rule and based on information about the institution and the community. The CRA establishes a four-tiered rating system, and banks receive an overall rating as well as ratings based on their performance in each state they operate in. The OCC conducts a CRA examination of a national bank every three to four years, with an extended examination cycle for smaller banks. Each quarter, the OCC releases a list of national banks to be examined under the CRA in the next two calendar quarters, allowing interested parties to file public comments about the banks' performance.
The CRA is implemented by Regulations 12 CFR parts 25, 228, 345, and 195. The Federal Financial Institutions Examination Council (FFIEC) is also involved in the CRA. The FFIEC is made up of the following agencies: the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the OCC. All institutions regulated by these agencies that meet the asset size threshold are subject to data collection and reporting requirements.
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Frequently asked questions
CRA stands for Community Reinvestment Act, enacted in 1977, which requires federal banking regulators to encourage financial institutions to meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods.
CRA applies to all depository institutions that carry FDIC deposit insurance and are regulated by the OCC, Federal Reserve, and FDIC that meet the asset size threshold. CRA does not apply to special purpose banks.
Banks must collect and report data on all applications for credit, including loans to businesses of all sizes, regardless of the outcome of the application. This includes information on the sex of principal owners and the LGBTQI+-owned status of small business loan applicants.
CRA examinations are conducted every three to four years for national banks, with an extended cycle for smaller banks. Data collected pursuant to Section 76.16 will be submitted upon request as part of a CRA evaluation, while the Section 1071 Regulation sets an annual reporting schedule.
