Are you new to the Community Reinvestment Act (CRA)? If so, you may have a few
questions. Some have compared getting a role in Compliance to a nightmare that many
have had. You know, the one where you walk into a classroom, back in school – only
to find a major test is afoot, for which you have not studied. Can you say stress?! Yet,
compliance shouldn’t make anyone feel this way.
What exactly is CRA? Why is it a regulation? Does every financial institution have to
comply? What are the elements of effective compliance with CRA? How is a bank
rated? Questions like this may be swirling around your head. Answering these five
questions is a great starting point, especially if you are new. It may even be great
information for sharing in a training session for all employees and your Board of Directors.
Enacted in 1977, the Community Reinvestment Act (CRA) affirmed the obligation of
federally insured depository institutions to help meet the credit needs of communities
in which they are chartered (consistent with safe and sound operations). The act also
charged the federal regulatory agencies (the FDIC, the OCC, the Federal Reserve and
the OTS) with implementing the CRA through regulations and by examining banks and
thrifts to determine whether they meet their CRA obligations. As you may know, bank
regulators take CRA ratings and exams into consideration when approving applications
for new bank branches and/or for mergers or acquisitions.
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