The Community Reinvestment Act and the Recent Mortgage Crisis

Authors

Randall Kroszner, Booth School of Business, University of Chicago

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Volume 4, Issue 1 | February 1, 2009

The Federal Reserve, together with the other federal financial regulatory agencies, has had some experience in addressing the credit needs of underserved communities, using the Community Reinvestment Act (CRA) as our guide. The CRA encourages financial institutions not only to extend mortgage, small business, and other types of credit to lower-income neighborhoods and households, but also to provide investments and services to lower-income areas and people as part of an overall effort to build the capacity necessary for these places to thrive.