To amend the community reinvestment act of 1977 to enhance the flow of investment capital for low and moderateincome housing in low and moderateincome neighborhoods. An introduction to the community reinvestment act john meeks atlanta region fdic community affairs. The community reinvestment act cra, enacted by congress in 1977 12 u. The community reinvestment act and the economics of. Community reinvestment act cra an act passed by congress in 1977 to encourage financial institutions to meet the credit needs of the communities in which they operate, including low and moderateincome neighborhoods. The community reinvestment act was introduced in 1977 and. Tuccille at reason notes, the federal government played a role in inducing, even strongarming, banks to take risks they otherwise would have avoided. Encourages banks to meet the credit needs of the communities theyre licensed to serve. Community reinvestment act wikipedia, the free encyclopedia. Understanding the basics of cra federal reserve bank of. Banking regulators became more active in enforcement of cra and. All handout files must be read with adobe acrobat reader. Community reinvestment act public file the community reinvestment act overview under the federal community reinvestment act cra, the federal deposit insurance corporation fdic evaluates tri counties bank s record of helping to meet the credit needs of the communities we serve consistent with safe and sound banking practices. Branch locations main office january 2000 hours of operation.
Conference report filed in house 0926 1977 conference report filed in house, h. The community reinvestment act and the economics of lending. Community reinvestment act financial definition of. Conference report filed in house 09261977 conference report filed in house, h. Community reinvestment act of 1977 cra ought to play. Federal reserve board the community reinvestment act. Congress enacted the community reinvestment act cra in 1977 to encourage banks and thrift institutions to serve the convenience and needs of the communities in which they are chartered to do business, including low and moderateincome lmi communities, and to do so in a manner consistent with the safe and sound operation of such institutions. These archived files are provided at no charge to bcg members.
Historical perspectives on the community reinvestment act. Housing and community development act of 1977title viii. Regulation bb community reinvestment bankers online. Treasury department issues recommendations on reforming. When the community reinvestment act or cra was passed in 1977, banks were riding high, experiencing steady recovery since the low point of the recession in 1975. Congress enacted the community reinvestment act cra in 1977.
Understanding the basics of cra federal reserve bank of san. Congress passed the community reinvestment act federal banking regulatory agencies issued regulation bb to implement law. That had contributed to the growth of ghettos in the 1970s. The chicago fed opened the following year, in november. Community reinvestment act cra enacted by congress in 1977, the cra encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. Historical perspectives on the community reinvestment act of. Federal deposit insurance corporation background cra enacted in 1977 to. The community reinvestment act an overview by stuart c. As a condition for the federal reserve s approval of green dots application to buy bonneville.
Choose from 24 different sets of community reinvestment act of 1977 cra flashcards on quizlet. Community reinvestment act public file tri counties bank. The community reinvestment acts harmful legacy competitive. Perspectives on the future of the community reinvestment act 47 t he community reinvestment act cra of 1977 responded to charges of redlining and discrimination by financial institutions. The cra obliged financial institutions to meet the credit needs of lowerincome communities in which they collect deposits.
To amend the community reinvestment act of 1977 to enhance the availability of investment capital for low and moderateincome housing in low and moderateincome neighborhoods. Learn community reinvestment act of 1977 cra with free interactive flashcards. Community reinvestment improvement act of 1994 1994. The stated intentions of green dot bank to meet its obligations under the community reinvestment act demonstrate the inability of the 1977 law to adapt to changes in todays banking system. In defense of the community reinvestment act scholarworks. The community reinvestment act cra encourages banks to help meet the credit needs of the communities they are chartered to serve, including the low. Since its passage in 1977, the community reinvestment act. Community reinvestment act united states 1977 britannica. Ever since its enactment in 1977, the community reinvestment act the cra or the act,2 a seemingly modest piece of legislation intended to motivate certain financial institutions to meet community credit needs, has been the focus of intense criticism within the financial community. Pdf the community reinvestment act of 1977 cra is the most important federal. Under the federal community reinvestment act cra, the comptroller of the currency evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. Enacted in 1977, it sought to eliminate bank redlining of poor neighborhoods. Community reinvestment act public file oregon coast bank. Community development amends the housing and community development act for 1974 to include the alleviation of physical and economic distress through private investment and community revitalization among the objectives of such act.
Gentrification became lowincome lending laws unintended. Many bankers object that the statute imposes burdensome requirements and unfairly disadvantages. Concerns about the deteriorating condition of americas cities, particularly lowerincome neighborhoods, led to the enactment of the community reinvestment act in 1977. Pdf the community reinvestment act after thirty years. The secretary of the treasury, in consultation with the federal banking agencies as defined in section 3z of the federal deposit insurance act 12 u.
The federal reserves central missions of maintaining price stability a. An amendment to the community reinvestment act in 1990 requires that each banks cra rating be made public. Community reinvestment act induced banks to take bad risks. Treasury department issues recommendations on reforming the community reinvestment act april 4, 2018 on april 3, 2018, the u. Jan 26, 2009 the community reinvestment act of 1977. Historical perspectives on the community reinvestment act of 1977 by michael v. Aug 21, 2015 the community reinvestment act cra encourages banks to help meet the credit needs of the communities they are chartered to serve, including the low and moderateincome neighborhoods in those areas. No community reinvestment act related written comments have been received. Congress passed the community reinvestment act of 1977 cra. Jun 25, 2019 the community reinvestment act encourages bank lending to low and moderateincome neighborhoods. The community reinvestment act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderateincome neighborhoods, consistent with safe and sound banking operations. Not guilty mortgage data refute charge that the cra is at the root of the financial crisis january 26, 2009 prepared by. The effectiveness of the community reinvestment act.
Community reinvestment enhancement act of 1994 1994. Community reinvestment act introduction the community reinvestment act cra is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderateincome neighborhoods, consistent with safe and sound banking operations. The community reinvestment act encourages bank lending to low and moderateincome neighborhoods. Community reinvestment act public file updated march 21, 2019. Treasury department issues recommendations on reforming the. Enacted in 1977, the cra affirmed the obligation of federally insured depository institutions to help meet the credit needs of communities in which they are chartered, consistent with safe and sound operations. The community reinvestment act of 1977 directed federal regulatory agencies to encourage banks and other lending institutions to help meet the credit needs of the local communities in which.
The community reinvestment act cra was enacted in 1977 to prevent redlining. Home mortgage disclosure act hmda passed by congress tracked lending in all communities. The community reinvestment act is based on geography, so its perfectly possible to comply with cra and have that pattern, said patricia mccoy, a law professor at boston college who oversaw mortgage policy initiatives for the consumer financial protection bureau. Federal deposit insurance corporation overview purpose of the community reinvestment act cra different cra evaluation types how to comply with cra practical ideas to consider. December 23, 20, marks 100 years since passage of the federal reserve act, which created the federal reserve system.
Community reinvestment act of 1977 federal reserve history. This year marks the thirtieth anniversary of the community reinvestment act cra. The country was excited about the recent release of the innovative apple ii computer with its amazing 4kb of ram and fiveinch floppy disc drive. Dec 31, 2019 the community reinvestment act cra, enacted by congress in 1977 12 u. Berry december 23, 20, marks 100 years since passage of the federal reserve act, which created the federal reserve system. The community reinvestment act, which prods banks to make loans in lowincome communities, encouraged banks to make riskier loans, concludes a recent study from the national bureau of economic research. Treasury department issued a report detailing a number of recommendations for reforming and modernizing the community reinvestment act of 1977 cra framework.
In redlining, neighborhoods were designated as not good for investment. Handout archive community reinvestment act cra bankers. Other articles where community reinvestment act is discussed. The community reinvestment act of 1977 is defined as a united states federal law designed to encourage commercial banks and savings associations to help meet the needs of the borrowers in all segments of their communities, including low and moderateincome neighborhoods. Cra is implemented by regulations 12 cfr part 25,iv 228,v 345,vi and 563e. Many advocates for the passage of this new law believed that this deterioration was fueled by, among other things, limited credit availability. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Historical perspectives on the community reinvestment act of 1977. It induces depository institutions to help meet the credit needs of the local communities in which they are char. The community reinvestment act of 1977 succeeded in. The federal community reinvestment act, which was passed in 1977, requires that all fdic insured banks, savings banks and savings and loan associations, whether state or federally chartered, conduct lending activities within their assessment areas.
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