Janet Yellen Cra
Janet Yellen Cra
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The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.). To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804.).
The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandates that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business. The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.
The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.
The same Federal banking agencies that are responsible for supervising depository institutions are also the agencies that conduct examinations for CRA compliance. These agencies are the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). In 1981, to help achieve the goals of the CRA, each of the Federal Reserve banks established a Community Affairs Office to work with banking institutions and the public in identifying credit needs within the community and ways to address those needs.
Implementation of the CRA by these financial supervisory agencies is enacted by Title 12 of the Code of Federal Regulations (CFR); Parts 25, 228, 345, and 563e with the addition of Part 203 as it relates to sections of the Home Mortgage Disclosure Act (HMDA).
The Federal Financial Institutions Examination Council (FFIEC) coordinates inter-agency information about the CRA. Information about the CRA ratings of individual banking institutions from the four responsible agencies (Federal Reserve, FDIC, OCC and OTS), is publicly available from the website of the FFIEC. These ratings were first made available by the Clinton administration to enable public participation and public comment on CRA performance.
In addition to the regulatory framework in place, each federal financial supervisory agency's Inspector General performs regular audits on any regulatory changes made to see if the intended goals are actually being fulfilled.
The original Act was passed by the 95th United States Congress and signed into law by President Jimmy Carter on October 12, 1977 (Pub.L. 95-128, 12 U.S.C. ch.30). Several legislative and regulatory revisions have since been enacted.
The hidden table below lists the acts of Congress that affected the Community Reinvestment Act directly. The years in which the legislative revisions were made appear in bold text preceding the Public Laws that enacted them. The links to the codification and section notes may provide additional information about the legislative changes as well.
SEC. 801. This title may be cited as the "Community Reinvestment Act of 1977"
The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandates that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business. The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.
The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.
The same Federal banking agencies that are responsible for supervising depository institutions are also the agencies that conduct examinations for CRA compliance. These agencies are the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). In 1981, to help achieve the goals of the CRA, each of the Federal Reserve banks established a Community Affairs Office to work with banking institutions and the public in identifying credit needs within the community and ways to address those needs.
Implementation of the CRA by these financial supervisory agencies is enacted by Title 12 of the Code of Federal Regulations (CFR); Parts 25, 228, 345, and 563e with the addition of Part 203 as it relates to sections of the Home Mortgage Disclosure Act (HMDA).
The Federal Financial Institutions Examination Council (FFIEC) coordinates inter-agency information about the CRA. Information about the CRA ratings of individual banking institutions from the four responsible agencies (Federal Reserve, FDIC, OCC and OTS), is publicly available from the website of the FFIEC. These ratings were first made available by the Clinton administration to enable public participation and public comment on CRA performance.
In addition to the regulatory framework in place, each federal financial supervisory agency's Inspector General performs regular audits on any regulatory changes made to see if the intended goals are actually being fulfilled.
The original Act was passed by the 95th United States Congress and signed into law by President Jimmy Carter on October 12, 1977 (Pub.L. 95-128, 12 U.S.C. ch.30). Several legislative and regulatory revisions have since been enacted.
The hidden table below lists the acts of Congress that affected the Community Reinvestment Act directly. The years in which the legislative revisions were made appear in bold text preceding the Public Laws that enacted them. The links to the codification and section notes may provide additional information about the legislative changes as well.
SEC. 801. This title may be cited as the "Community Reinvestment Act of 1977"
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