Community Reinvestment

As a consultant to a leading Hispanic effort that has been involved with community development, I feel obligated to touch on this conversation subject.

The Community Reinvestment Act (CRA) was passed by Congress in 1977, and federally insured banks & savings institutions (with more than $250M in assets) have since then been obliged to meet the credit needs of low-income areas in the communities they serve. This sort of law (and government intervention) actually helps prevent the bifurcation of access to capital across the rich and poor.

Some small banks complain that the CRA documentation is too burdensome and that good community lending & investment opportunities are scarce, given competition from bigger lenders. Others rant that the definition of a small business loan, $1M or less, is too restrictive. I think this is completely off.

Groups like the Hispanic Alliance for Progress can provide community development services, leveraging innovative services and technical assistance grants, for banks that are having troubles complying. And, HAP is definitely not the only organization of its kind.

My vote - keep the laws as they are and make sure that banks are in compliance & that funds are being put to good use, not just meeting the legal criteria.