What Is Community Reinvestment Act?

The Community Reinvestment Act (CRA), enacted in 1977, requires FDIC-insured banks to demonstrate that they are meeting the credit needs of their entire community, with particular attention to low- and moderate-income (LMI) neighborhoods. The law was a response to the practice of "redlining," where banks would take deposits from communities but refuse to make loans there.

Banks are evaluated on their CRA performance and assigned a rating: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. Regulators consider CRA ratings when banks apply for mergers, acquisitions, or new branch openings. A poor CRA rating can delay or block these applications, creating a strong business incentive for compliance.

CRA examinations evaluate three areas for large banks: lending (do they make loans in LMI areas?), investment (do they invest in community development?), and service (are branches accessible to LMI communities?). The 2023 CRA modernization rules updated the framework to account for online banking, mobile banking, and the reality that banks increasingly serve communities beyond their physical branch footprint.

For depositors choosing a bank, CRA performance can be a useful signal of a bank's commitment to responsible lending practices. Banks with Outstanding CRA ratings tend to have deeper community ties and more diverse loan portfolios. You can look up any bank's CRA rating on the FFIEC website. From a financial safety perspective, CRA compliance does not directly affect a bank's Health Score on BankHealthData, but banks that serve their communities responsibly tend to maintain more stable deposit bases and customer relationships.