The twenty-fifth anniversary of the community reinvestment act: past accomplishments and future regulatory challenges

The US Congress passed the Community Reinvestment Act (CRA) in 1977 to encourage depository institutions to meet the credit needs of lower income neighborhoods. The CRA was built on the simple proposition that deposit-taking banking organizations have a special obligation to serve the credit needs of the communities in which they maintain branches. The paper focuses on the regulatory and legislative challenges that confront the act at age twenty-five. The impact that the CRA has had on home mortgage lending to lower income people and communities is documented and changes in industry structure is assessed. In either case, there appear to be two major pathways to reform: 1. reform could maintain and improve upon the CRA's historical focus on residential mortgage lending, or 2. reform could reposition the CRA to give more emphasis to community-development activities and the provision of banking services to lower income people and communities more generally. In any event, the Community Reinvestment Act must change.