The Community Reinvestment Act, passed by Congress in 1977, encourages financial institutions to help meet their communities' needs—through safe and sound lending practices and by providing retail banking and community development services.

Federal regulators monitor whether banks and thrifts are fulfilling their CRA obligations. By law, these federal agencies—the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision—must

  • regularly review the CRA performance of banks and savings and loans, and
  • take into account the CRA record of a bank or thrift when it applies to open a new branch or merge with or acquire another institution.

In addition, each of the federal agencies works to educate these institutions about successful CRA programs in other parts of the country and suggests other ideas that might help develop the community.

An amendment to the Community Reinvestment Act in 1990 requires that CRA ratings be made public. Each bank or thrift must maintain a public file that contains the public section of its most recent CRA performance review, a list of its services and branches, written comments from the public, and certain other information.

boy selling lemonade