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Enacted by Congress in 1977, the Community Reinvestment Act (CRA) is a federal law that requires banks to meet the credit needs of the communities they serve, particularly individuals and businesses in low- and moderate-income neighborhoods. CRA was developed in response to “redlining” practices in which banks deemed particular neighborhoods—typically low-income or predominantly minority neighborhoods—unfit for investment. CRA compliance is monitored by three bank regulatory agencies: the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). CDFIs serve as the financial intermediaries between low-income communities and commercial banks to ensure that the banks can meet their CRA requirements.
CRA-funded projects have traditionally focused on affordable housing and business development but today include investments like grocery stores, charter schools, health clinics, and other community facilities that address the social determinants of health. In 2011, financial institutions made $209 billion in CRA loans.