Community Reinvestment Act Reforms: A Powerful Tool Against Racial Discrimination in Finance


On Oct. 24, 2023, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency passed important updates to the Community Reinvestment Act (CRA), taking a well-needed step in improving an aspect of the law untouched this century. Initially passed and adopted in 1977, the CRA is a landmark U.S. civil rights law aimed at countering racial discrimination in lending. The recent changes strengthen the financial inclusion intent of the original law, while updating its regulations to better reflect modern financing. NEFE commends these thoughtful efforts to update the CRA to better address current needs. These changes will go into effect in 2026. The final revisions can be found here.

The CRA requires federal banking regulators to encourage banks to meet the lending needs of their communities, including low- and moderate- income neighborhoods. The last major revision to the CRA regulations happened in 1995, and the banking world has changed enormously since then. The proliferation of online banking significantly weakened the value of the CRA’s rating system which was based on assessments of location-based offices. Further, non-bank lenders were not covered under the statute despite representing a growing part of the loan industry. Data collection and public reports did not provide enough detail to determine how an individual bank served its community.

The CRA’s recent updates:

  • Expands assessments to evaluate lending beyond traditional brick-and-mortar branches to include online and mobile branching, branchless banking, and hybrid models.
  • Clarifies requirements for financial institutions to achieve a passing grade without lowering standards.
  • Promotes financial inclusion by supporting bank activities with Minority Depository Institutions and Community Development Financial Institutions and in Native Land Areas, persistent poverty areas and other high-need areas.

The Fed shepherded these changes with careful thought and community input through a thorough “Advance Notice of Proposed Rulemaking.” They received more than 600 comment letters and held 51 listening sessions nationwide to better understand stakeholder concerns and perspectives. This feedback helped shape their official proposal for updates.

These changes strengthen the CRA’s mission of addressing credit access inequities and modernizing it to better address today’s challenges. The financial services sector has played a significant role in creating and perpetuating the racial wealth gap in the U.S. through discriminatory lending practices. The CRA is one of the most potent tools financial regulators have to address this divide. NEFE applauds these efforts working toward a more equitable financial experience for all Americans.

To learn more about NEFE’s work toward financial inclusion, check out NEFE’s funding priorities and 2021 policy convening summary on how financial education can better support diverse cultures.

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