Earlier this week, U.S. banking regulators released long-awaited rules finalizing transformative reforms to the 1977 Community Reinvestment Act (CRA). The Alliance applauds the regulating bodies for taking this action, which represents the most significant effort to modernize and strengthen the CRA in nearly 30 years.
Conceived in the wake of the civil rights movement, the CRA was enacted to rectify the historical practices of redlining by requiring banks to equitably serve their communities. The CRA has been instrumental in shaping the community investing ecosystem, flowing capital to community development financial institutions (CDFI) and minority depository institutions (MDI) that serve as critical intermediaries in underserved communities. That said, the CRA has yet to fulfill its core purpose. The stark racial homeownership gap today remains nearly the same as it was three decades ago. And recent surveys indicate that small businesses owned by people of color continue to experience disproportionate difficulty accessing funding needed to overcome financial challenges.
The new regulations, set to take effect in January 2026, promise to catalyze more lending to low- and moderate-income communities while accounting for the evolving landscape of modern banking.
Last year, the U.S. Impact Investing Alliance joined our peers in submitting comments to the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC). These comments emphasized the importance of a modernized CRA that will hold banks accountable for how well they serve their communities and drive needed capital to the CDFI and MDI industry. While the final regulations fall short of manifesting a race-conscious CRA as we and many of our peers support, the Alliance is encouraged by the significant progress made.
The CRA is just one tool that helps flow private sector investments into underserved communities, and we look forward to continuing to advocate for the full range of tools and solutions necessary to create a more equitable economy.