Community Reinvestment Act (CRA)

The Community Reinvestment Act (CRA, 1977) — codified at 12 U.S.C. §§ 2901–2908 — requires federally insured banks and thrifts to serve the credit needs of all communities in their assessment areas, including low- and moderate-income (LMI) neighborhoods, as a condition of their federal charters and deposit insurance. The law was Congress's legislative response to "redlining" — the practice by which banks systematically denied mortgages and other credit in minority and low-income neighborhoods, contributing to concentrated poverty and disinvestment. Banks are evaluated by their federal regulators (OCC for national banks, Federal Reserve for state member banks, FDIC for state nonmember banks) on a four-point scale: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. CRA ratings matter for banks: a poor CRA rating can block or delay mergers, acquisitions, and new branch applications — giving regulators real leverage. Banks collectively commit hundreds of billions of dollars annually in CRA-motivated community development lending and investment. In October 2023, the federal banking agencies finalized the first comprehensive CRA rule modernization since 1995, which would have expanded assessment areas to include online and mobile banking footprints, updated the retail lending test, and added new performance benchmarks. The 2023 rule was preliminarily enjoined by the U.S. District Court for the Northern District of Texas in March 2024 before key provisions took effect, and on July 16, 2025 the OCC, Federal Reserve, and FDIC jointly issued a notice of proposed rulemaking to rescind the 2023 rule and restore the 1995 CRA framework with technical amendments. As of 2026 the 1995 CRA regulations remain operative.

Current Law (2026)

Legal Authority

• 12 U.S.C. § 2901 — Congressional findings and purpose (regulated financial institutions are required to demonstrate that their deposit facilities serve the convenience and needs of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound operation)
• 12 U.S.C. § 2903 — Evaluation (the appropriate federal financial supervisory agency shall assess each institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, in connection with its examination)
• 12 U.S.C. § 2906 — Written evaluations (each regulatory agency must prepare a written evaluation of each institution's CRA performance, including a rating; the public section of the evaluation must be available to the public)
• 12 U.S.C. § 2907 — Operation of branch facilities for minority communities (institutions that donate or sell branches in minority neighborhoods to minority-owned depository institutions may receive CRA consideration)
• 12 U.S.C. § 2908 — Small bank regulatory relief (institutions with $250 million or less in assets follow streamlined exam schedules based on prior ratings)

How It Works

The Community Reinvestment Act was Congress's response to decades of redlining — the systematic denial of credit and banking services to communities of color and low-income neighborhoods. CRA requires banks to serve ALL the communities where they take deposits, not just the profitable ones.

For much of the 20th century, banks and federal agencies explicitly discriminated in lending — the Home Owners' Loan Corporation created color-coded maps in the 1930s that rated neighborhoods, "redlining" Black and minority areas as too risky for mortgage guarantees, and the FHA and private banks followed suit, taking deposits from minority communities while refusing to lend there. The result was systematic disinvestment: neighborhoods starved of credit deteriorated, confirming the prejudice that drove the denial. CRA, enacted in 1977 alongside other fair lending laws like the Fair Credit Reporting Act, aimed to break this cycle by requiring banks to serve ALL the communities where they take deposits — not just the profitable ones.

CRA doesn't mandate specific loans or investments. Instead, it requires regulators to evaluate each bank's record of meeting community credit needs and to consider that record when the bank applies for mergers, acquisitions, or new branches — creating an incentive system where banks that want to grow must demonstrate they're serving low- and moderate-income areas. The evaluation produces a public CRA rating (Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance). Large banks face three tests: the Lending Test (mortgages, small business, and consumer loans in their assessment areas, particularly to LMI borrowers and neighborhoods); the Investment Test (community development investments in affordable housing, economic development, community facilities); and the Service Test (branch and ATM accessibility in LMI areas). CRA's most powerful enforcement mechanism is its connection to regulatory approvals — banks with poor CRA ratings face denial or delay of merger and expansion applications, which gives community organizations leverage to file comments and negotiate lending commitments during the application process. CRA commitments have channeled trillions of dollars into underserved communities since the 1990s. The CRA framework was largely unchanged from 1995 until the OCC, Federal Reserve, and FDIC finalized a major modernization in October 2023 that would have expanded assessment areas (reflecting online lending beyond branch footprints), created metrics-based performance benchmarks, and evaluated community development activities more granularly. That rule was preliminarily enjoined in N.D. Tex. in March 2024, and the agencies issued a joint NPR in July 2025 to rescind it and revert to the pre-2023 (1995) framework — which remains operative.

How It Affects You

If you live in a low- or moderate-income (LMI) neighborhood: CRA is one of the primary legal mechanisms that keeps banks investing in communities that would otherwise be less profitable to serve. Under the 1977 Act (12 U.S.C. § 2901) and implementing regulations, banks are evaluated on how well they serve all segments of their assessment areas — including LMI tracts and LMI borrowers. In practice, this means banks have a regulatory incentive to: offer mortgage products in your neighborhood, maintain physical branches (not just close them as economically unproductive), provide small business loans to neighborhood enterprises, and invest in affordable housing developments through Low Income Housing Tax Credit (LIHTC) equity investments. Your practical access to these services depends partly on CRA pressure — look up your local bank's most recent CRA performance evaluation at the FFIEC's CRA public file portal (ffiec.gov). If your bank has a "Needs to Improve" or "Substantial Noncompliance" rating, that rating constrains their ability to merge, expand, or open new branches — and community organizations can amplify that pressure during regulatory review.

If you're a small business owner in an underserved area seeking capital: Banks actively seek qualified CRA credit for small business lending in LMI areas. A small business loan — typically under $1 million and to a business with revenues under $1 million for maximum CRA credit — to a business located in an LMI census tract or serving LMI individuals qualifies as a CRA-eligible activity. When you approach a bank for a small business loan: ask whether they have a Community Development Lending program or a CRA officer — some banks have dedicated units looking to originate exactly these loans. CDFIs (Community Development Financial Institutions) — often leveraged by bank CRA investments — can provide smaller loan amounts and more flexible underwriting than traditional banks. Find certified CDFIs at cdfifund.gov. State-chartered CRA requirements (California, Massachusetts, and Illinois have their own CRA laws) may extend CRA obligations to credit unions and other lenders not covered by the federal law.

If you're a community organization or housing advocacy group: CRA gives you formal leverage during bank regulatory processes. When a bank applies to merge, acquire another institution, expand, or open new branches, the OCC, Federal Reserve, or FDIC must consider the bank's CRA performance — and you can submit formal comments opposing or conditioning approval based on inadequate LMI lending. This comment right has been used effectively: major bank mergers have been delayed or conditioned on Community Benefits Agreements (CBAs) committing hundreds of millions of dollars in LMI lending, CDFI investments, and branch retention. CBA negotiation during bank merger reviews has generated over $500 billion in community investment commitments since the 1990s. Organizations like the National Community Reinvestment Coalition (ncrc.org) track pending merger applications and coordinate comment campaigns. You can also use the CRA public file — every bank must maintain a public file of its CRA performance evaluations, assessment area definitions, and list of CRA activities — to document gaps in service.

If you're a bank compliance officer or CRA officer: CRA compliance significantly affects your institution's ability to grow. A "Needs to Improve" or "Substantial Noncompliance" CRA rating can block merger approval, branch expansion, and new product offerings — the OCC, Federal Reserve, and FDIC routinely condition approvals on CRA rating improvement. The 2023 CRA Final Rule (OCC/Fed/FDIC) would have substantially revised the CRA framework for the first time since 1995, but it was preliminarily enjoined by the N.D. Tex. in March 2024 and the agencies issued a joint NPR in July 2025 proposing to rescind it and restore the 1995 framework. As of 2026, examinations continue under the 1995 regulations; planning for the abandoned 2023 retail lending and assessment area provisions is no longer required, though banks that built compliance infrastructure for the 2023 rule should track the final rescission rule. CRA performance evaluations are public: a poor public rating is a reputational risk in addition to a regulatory obstacle.

State Variations

• CRA is federal law, but several states have enacted their own community reinvestment requirements
• State CRA laws may cover institutions not subject to the federal CRA (state-chartered credit unions, mortgage companies, insurance companies)
• New York, Illinois, Massachusetts, and other states have state CRA statutes with additional requirements
• Some states and localities have their own responsible banking ordinances that consider CRA ratings when selecting depositories for public funds

Implementing Regulations

• 12 CFR Part 25 — OCC CRA Regulations for National Banks and Federal Savings Associations (the OCC's implementation of the Community Reinvestment Act, substantially rewritten in the 2024 interagency reform — the largest CRA overhaul in 30 years). Key provisions:

  • § 25.16 — Facility-based assessment areas (FBAAs): each bank must delineate assessment areas around every branch, ATM cluster, or deposit-taking facility — geographic areas where the OCC evaluates the bank's retail lending and community development performance
  • § 25.17 — Retail lending assessment areas (RLAAs): NEW under the 2024 rule — if a bank originates 150+ home mortgage loans or 400+ small business loans in a geographic area without a physical presence there, that area becomes an RLAA and is separately evaluated; designed to hold digital-first banks accountable for communities they serve online
  • § 25.21 — Performance tests for large banks: four tests for banks with assets over $2 billion — the Retail Lending Test, Retail Services and Products Test, Community Development Financing Test, and Community Development Services Test; ratings on each test are combined for an overall CRA rating
  • § 25.22 — Retail lending test: evaluates the distribution of mortgage, small business, small farm, and auto loans to LMI borrowers and census tracts; benchmarked against peer lender performance in the same area and against demographic data; lender-to-borrower income ratios and census tract LMI shares drive the score
  • § 25.24 — Community development financing test: a dollar-volume metric comparing the bank's community development loans and investments (affordable housing, economic development, community facilities, targeted revitalization) to a peer benchmark; banks scoring below the benchmark trigger further review
  • § 25.28 — CRA ratings: five-tier system — Outstanding, High Satisfactory, Low Satisfactory, Needs to Improve, Substantial Noncompliance (the 2024 rule added the High/Low Satisfactory distinction to replace the single "Satisfactory" band)
  • § 25.29 — Small bank evaluation: banks under approximately $600 million in assets receive a simplified exam covering only retail lending distribution — not the full four-test suite — reducing compliance burden
  • § 25.31 — Effect on applications: OCC must consider CRA rating when evaluating any application for deposit facilities (mergers, acquisitions, new branches, conversions); Needs to Improve or Substantial Noncompliance ratings may result in denial
  • §§ 25.42–25.43 — Data collection and public file: banks must collect and report mortgage, small business, small farm, and auto loan data by census tract; the public file (available in branches and online) must include CRA evaluations, assessment area maps, and a list of community development activities

  The 2023 interagency rule represented the first comprehensive CRA overhaul since 1995 — co-issued by OCC, the Federal Reserve (12 CFR Part 228), and the FDIC (12 CFR Part 345). A federal court in the Northern District of Texas preliminarily enjoined key provisions in March 2024 before they took effect; the agencies subsequently issued a joint NPR (July 16, 2025) proposing to rescind the 2023 rule and restore the 1995 CRA regulations with technical amendments. As of 2026 the 1995 framework remains operative; the rescission proposal is in finalization. The §§ 25.16–25.43 architecture described above reflects the now-being-rescinded 2023 rule rather than current examination practice.

• 12 CFR Part 228 — Federal Reserve CRA regulations: performance standards and evaluation criteria for state member banks, effect of CRA ratings on applications for deposit facilities

• 12 CFR Part 345 — FDIC CRA regulations: performance standards and evaluation criteria for state nonmember banks, effect of CRA ratings on applications for deposit facilities

• 12 CFR Part 207 — FDIC CRA communications and fulfillment requirements for insured depository institutions

12 CFR Part 35 — Disclosure and Reporting of CRA-Related Agreements (Gramm-Leach-Bliley Act § 711): requires both insured depository institutions (and their holding companies) and the nongovernmental entities (NGEPs — community organizations, advocacy groups) they deal with to publicly disclose any "covered agreement" — an arrangement made in connection with a CRA communication where the bank commits to providing cash, below-market loans, or other goods and services with aggregate value of at least $10,000 per year. The disclosure rule was enacted to shine light on private commitments that banks sometimes make to community groups in exchange for favorable CRA-related comments to regulators:

• § 35.2 — Covered agreement: an agreement must meet all four criteria to be covered: (1) an insured depository institution or affiliate is a party; (2) a nongovernmental entity or person is a party; (3) the agreement was made in connection with a "CRA communication" (a comment, testimony, or response to a request for commitments relating to a CRA examination or application for deposit facilities); and (4) the agreement provides for aggregate payments of at least $10,000 in any calendar year; one-time charitable donations unconnected to CRA communications are not covered; genuine arms-length commercial transactions are not covered
• § 35.3 — CRA communications: defined broadly — any written or oral comment or testimony to a federal banking agency concerning a CRA examination or application; any communication that is a response to a request from the bank for a commitment relating to CRA; any communication in which a party to the agreement has discussed CRA in connection with the bank's CRA performance; the breadth of this definition means many routine community advocacy communications can trigger the covered agreement requirement if they are connected to a subsequent commitment
• § 35.6 — Disclosure to regulators: both the bank (or holding company) and the NGEP must each file a copy of any covered agreement with the bank's primary federal banking regulator within 30 days of execution; subsequent annual reports on fulfillment of the obligations must also be filed; if either party fails to file, both may be in violation of the GLB Act
• § 35.7 — Annual reports: each party must file an annual report covering the parties' obligations under the agreement and the extent to which those obligations were fulfilled; the annual report includes details of payments made, loans extended at below-market rates, and other goods or services provided pursuant to the agreement
• § 35.8 — Public availability: the OCC (and other regulators) make filed covered agreements available to the public under FOIA; agreements are available for inspection at the regulator and on the regulator's website; public availability means CRA advocacy groups, shareholders, and media can review commitments banks have made

Part 35 (and its parallel versions at the Fed — 12 CFR Part 207, and the FDIC — 12 CFR Part 346) created the only systematic public record of private CRA commitments. Before Gramm-Leach-Bliley enacted this disclosure requirement in 1999, banks routinely made commitments to community groups to secure favorable CRA comments or withdraw CRA challenges to merger applications, without any public record. The disclosure rules increased transparency but also created some deterrent to the use of CRA comments as leverage for obtaining private commitments. No recent rulemaking — Part 35 has been stable since it was promulgated to implement GLB Act § 711 in 2001.

Pending Legislation

No standalone Community Reinvestment Act reform bills pending in the 119th Congress.

Recent Developments

• The October 2023 CRA modernization rule would have been the most significant update to CRA regulations in nearly 30 years, but was preliminarily enjoined by the N.D. Tex. in March 2024 before key provisions took effect
• The OCC, Federal Reserve, and FDIC jointly issued an NPR on July 16, 2025 proposing to rescind the 2023 rule and revert to the 1995 CRA framework with technical amendments; as of 2026 the 1995 regulations remain operative
• CRA has channeled an estimated $6+ trillion in lending and investment commitments to LMI communities since the 1990s
• Debates continue about whether CRA should apply to non-bank lenders (fintech companies, mortgage companies) that now originate a majority of home loans — an issue the CFPB has weighed in on through its nonbank supervision program
• Climate and environmental justice advocates have pushed for CRA consideration of environmental factors in community development