Summary: Concerned that banks and thrifts were unresponsive to credit needs in low- and moderate-income areas, Congress enacted the Community Reinvestment Act of 1977 (CRA) CRA requires federal bank and thrift regulatory agencies to encourage institutions to help meet credit needs in all areas of the communities that they serve, consistent with safe and sound operations. CRA also requires the regulators to assess institutions' CRA performance during examination and to consider that performance when evaluating institutions' applications for expansion or relocation of operations. Growing concern about the effectiveness of CRA's implementation and its regulatory burden on institutions led to the recent revision of CRA regulations. This report addresses the following four questions: (1) what were the major problems in implementing CRA, as identified by the affected parties--bankers, regulators, and community groups? (2) to what extent do the regulatory reforms address these problems? (3) what challenges do the regulators face in ensuring the success of the reforms and what actions would help regulators face these challenges? and (4) what initiatives have been taken or proposed to help bankers overcome community lending barriers and enhance lending opportunities, particularly in low- and moderate-income areas?
