Community Reinvestment Act
A Guide to How it Can Be Used by Community Organizations
The Community Reinvestment Act (CRA) is a federal law that makes it illegal for a bank to turn you down simply because of the part of town that you live in.
CRA can help you get things such as loans, grants, used furniture for your community organization even though the bank has already turned down your request.
CRA encourages banks to seek new and creative ways to meet the credit needs of the community. Banks that fail to do this often get in trouble with the federal regulators. CRA does not require banks to make loan to people who have bad credit histories or who do not have enough income to pay the loan back.
CRA encourages people to communicate with banks regarding suggestions for how they can better meet the credit needs of the community.
The federal regulators require that a bank's upper management make meeting CRA obligations a high priority. If a particular bank refuses to talk to someone or refuses to give someone what is reasonably asked for a letter can be written to the bank's "public comment file". A copy of that letter should be sent to the United States Comptroller of the Currency. The federal regulators will usually try to then contact that person and the bank to get more information about the grievance. Such letters could potentially get a bank into CRA trouble. Using this tactic makes banks nervous. The regulators have the power to drop a banks CRA rating from "satisfactory" to "needs improvement" thus making life more difficult for them. If the rating drops regulatory approval for even routine requests by a bank becomes difficult to obtain.
You can learn more about a bank's performance by viewing their recent "Home Mortgage Disclosure Act" (HMDA) statements. Banks are required to make these statements available to members of the public upon request.
This, then, is how CRA can be used. There is no magic. You simply think of something you want, call your local bank president to make an appointment, and then ask for it. If the bank ignores your request or turns you down for no good reason you can send complaint letter to the federal regulators. The feds WILL always look into such complaints. CRA can help open the bank's door.
FOR MORE INFORMATION:
-The
Federal Financial Institutions Examination Council's CRA Website-The
Federal Reserve Board's CRA Website-The
Comptroller of the Currancy's CRA Website