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The Community Reinvestment Act (CRA)

What is CRA?

The Community Reinvestment Act, or CRA, is both a state and federal law that encourages banks to meet the credit needs of all communities, including low and moderate-income areas. New York State is one of only 12 states with its own CRA. New York's CRA largely mirrors the federal CRA. The New York State CRA was adopted in 1978, one year after the 1977 federal CRA law, largely in response to concerns about the existence of redlining of poor and minority communities by banking institutions during the 1960s and 1970s.

Among other things, the Act and its regulations authorize the Department to evaluate an institution's performance and to issue one of four possible ratings

  1. Outstanding;
  2. Satisfactory;
  3. Needs to improve; and
  4. Substantial noncompliance.

Each institution is required to define its "assessment area", based on the location of its branches and the areas in which they make loans. Part 76 sets forth a detailed framework for evaluating banks, depending upon whether the bank is a large bank, a small bank, an intermediate small bank, or a wholesale or limited purpose institution.

CRA does not contain any formulas, dollar figures or lending ratios that must be achieved by an institution in a specific community. Rather, what constitutes a satisfactory level of lending, investment and service by an institution is determined in the context of many different factors, including: opportunities presented by a specific community (i.e., demographic and economic factors); the institution's product offerings and business strategy; institutional capacity, constraints, and other factors.

Although the CRA does not contain any punitive measures (i.e., sanctions) for poor performance, an institution may be prevented from concluding an expansionary transaction (i.e. merger, new branch, etc), if the bank has a poor CRA record. Alternatively, the Department s approval may be made conditional upon the bank s written commitment or projections to improve its performance over a specified period of time.

Applications currently under review are posted in the Department's Weekly Banking Bulletin, and assigned a public comment period that reflects the Department s policy for that type of application.

Summary of CRA Opinion Letters

Frequently Asked Questions about CRA