Community Reinvestment Act (CRA)

What Is the Community Reinvestment Act?

The Community Reinvestment Act (CRA) is a 1977 federal law that encourages banks to help meet the credit needs of the communities where they take deposits. Congress found that banks have a “continuing and affirmative obligation” to serve local credit needs, including in low- and moderate-income neighborhoods. The law was part of a response to redlining, the practice of denying credit to whole neighborhoods. The history of redlining and fair housing explains that background.

The CRA does not set lending quotas. Instead, it requires regulators to examine and publicly rate each bank’s record.

How It Works

Three federal agencies supervise compliance: the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve. Examiners review a bank’s lending, investments, and services, then assign one of four ratings. A weak rating can lead regulators to deny or condition a bank’s application to open a branch, merge, or acquire another institution.

Under the current rules, “community development” includes affordable housing for low- and moderate-income people. Low income means below 50% of area median income, and moderate income means 50% to below 80%. Middle income runs from 80% to below 120%. These labels differ from HUD’s, which uses low-income for households up to 80% of area median income.

The rules are in flux. Regulators adopted a major overhaul in October 2023, but a federal court in Texas blocked it in March 2024 before it took effect, so agencies kept applying the older rules. In July 2025 they proposed rescinding the 2023 rule. The OCC and FDIC later dropped that rescission and, on August 12, 2026, proposed targeted changes instead, with comments due October 13, 2026. The Federal Reserve did not join that proposal.

Why It Matters for Workforce Housing

The Congressional Research Service notes that banks supply most investment in Low-Income Housing Tax Credits, partly because the CRA treats those investments favorably. That makes the CRA a major indirect source of affordable housing equity.

Housing for households above 80% of area median income generally does not count, which limits CRA support for much of the workforce housing band. The main exception is guidance that lets regulators consider housing for middle-income households in high-cost areas. The August 2026 proposal would write that exception into the rules for unsubsidized rentals and asked for comment on whether it belongs in the definition at all.