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The Problem with the Community Reinvestment Act

 

The Community Reinvestment Act (CRA) is a civil rights law passed in 1977 to prevent redlining and to encourage banks and savings associations (collectively, banks) to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods and individuals.

 

The CRA requires banks to lend and provide services equitably and support community development in the places where they do business.  The CRA is supposed to be color-blind. However, it allows too many banks to pass without serving their communities or the individuals living in those communities.

 

The CRA hasn’t kept up with the changes or workarounds in the banking industry. As such, the system perpetuates discrimination, bias, and displacement, and widens the racial wealth gap it was meant to narrow.