Not Normal Times: What Is the Future of CRA?

Since the financial crisis began, many bankers have wondered how the Community Reinvestment Act (CRA) will be updated to fit the changing financial landscape.

The 1977 law was created to make financial services more readily available in low- and moderate-income communities. However, some observers say it is time to update the law. Fed Gov. Elizabeth Duke, a former community banker, outlined the principles needed for a new CRA framework in a speech earlier this year.

"Keep the most effective feature of the law—its flexibility," she said. "Any new regulatory structure should also be clear about the problem we are trying to solve, determine who is in the best position to solve the problem, and be transparent and designed to ensure that community benefit is maximized without placing excessive regulatory burden on financial institutions."

Locally, bankers are seeing fewer opportunities to pursue CRA activities, and are wondering what's going to change. "Obviously, during normal economic times CRA is a challenge for lending, service and investment," says William Stemmler, vice president for CRA Community Development of Cadence Bank N.A. in Memphis, who attended a Fed CRA Interagency Training Workshop in April.

"These are not normal times, and I must say I have never lived through such a challenge during my 40 years in banking," he says. "Foreclosures, bankruptcy, unemployment and the banking liquidity crisis have made community development extremely difficult in most markets across the United States. Now, you have to work a lot harder to uncover opportunities for CRA."

To help you understand where CRA is headed, download the Fed's new "Revisiting the CRA: Perspectives on the Future of the Community Reinvestment Act" at The book offers a variety of ideas and opinions on revising the law.

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Read Gov. Duke's speech


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