New Report: Examination of the Community Reinvestment Act

Posted by on October 04, 2010

Late last week, National Community Reinvestment Coalition (NCRC) released its latest report:

Safe and Sound Lending in Neighborhoods:
An Examination of the Community Reinvestment Act at work in Washington, DC and Houston, TX

Study Found CRA Softened the Blow to Prime Home Lending in Two Large Metro Areas
During the 2006 through 2009 time period, CRA-covered institutions (i.e. banks) had prime home lending levels that were more stable than non-covered CRA institutions.

Data Showed CRA Needs Expansion and Strengthening
Also, consistent with Federal Reserve research, CRA-covered institutions were considerably less likely to issue high-cost and risky loans in geographical areas on their CRA exams than non-CRA covered mortgage companies (this finding applied to Houston and DC–as well as nationally). While the study reveals the benefits of CRA, it also shows the need to strengthen CRA. In both metro areas, CRA-covered banks exhibited disparities in small business lending and bank branching across race and income-level of neighborhood.

Conclusions
The report concludes that the types of disparities seen in DC and Houston can be addressed through a stronger CRA that:

* is expanded to cover non-bank lenders,
* increases the geographical areas under CRA, and
* places greater importance on small business lending and branch services covered under CRA.

Link to Study
For a copy of the study and press release, see the home page of NCRC’s web page (http://www.ncrc.org) or click: http://www.ncrc.org/images/stories/mediaCenter_reports/ford_nhood%20analysis-final.pdf