Federal Reserve Bank of San Francisco

Community Development

The 30th Anniversary of the CRA: Restructuring the CRA to Address the Mortgage Finance Revolution

February 2009

Community Development Investment Review

Described by Congressman Barney Frank as “a market-friendly model” for bank reform, the Community Reinvestment Act (CRA) was passed by Congress in 19772 to fuel reinvestment as a cure for urban blight, and to promote access to mortgage capital to remedy the adverse implications of persistent redlining. In deference to concerns about unsound and unprofitable loans, the CRA did not establish specific benchmarks or levels of credit, nor did it provide much guidance as to how regulators should evaluate bank performance. Instead, the CRA created an affirmative obligation for banks to reinvest in poor communities.

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