The Community Reinvestment Act: Past Successes and Future Opportunities

Authors

Eugene A. Ludwig, Promontory Group of Companies; James Kamihachi, Promontory Financial Group; and Laura Toh, Promontory Financial Group

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Volume 4, Issue 1 | February 1, 2009

More than 30 years ago, before passage of the Community Reinvestment Act (CRA), relatively few banks made meaningful numbers of loans to people with low and moderate incomes. Whether because of racial discrimination or fear of credit weaknesses, many banks “redlined” entire areas of American cities as places where they would not lend. Accordingly, most inner cities were islands of urban blight whose residents had limited access to capital. The prospects were scant for breaking the cycle of urban decay, except through direct government investment.