Rediscovering Reinvestment

Walters talks about the Community Reinvestment Act (CRA). For years, however, it's been a challenge to move the key players in any CRA deal--banks, regulators and community development advocates--in new directions. The reason gets down to a basic tenet of the CRA: The program, aimed at low- and moderate-income neighborhoods, is rooted in housing. The impetus for it was a disturbing pattern of active disinvestment by banks in low-income and minority areas around the country, particularly with mortgages but also in the area of small business loans. Under the new law, banks were being asked to redirect a portion of their lending capital to low- and medium-income areas within a defined geographical range covered by the bank. Regulators would, in turn, do regular reviews of bank lending practices to gauge compliance.