The Community Reinvestment Act as a Catalyst for Integration and an Antidote to Concentrated Poverty

Abstract

Abstract Policymakers tend to focus on federal programs as remedies to poverty. While important, the largest of these programs do not combat poverty’s geographic aspects. The Community Reinvestment Act (CRA) imposes an affirmative obligation on banks to meet the credit needs of low- and moderate-income (LMI) neighborhoods. The act is designed to promote affordable housing and economic development by combating lending discrimination, thereby alleviating poverty and building wealth in LMI areas. Federal CRA exams rate banks on their loans and investments in LMI neighborhoods. By promoting responsible lending, the CRA has increased homeownership and small-business ownership in those neighborhoods. However, the act’s full potential to combat concentrations of poverty has not been realized. This chapter explores how improved examination procedures can make the CRA more effective in promoting integration in gentrifying and distressed neighborhoods and how the CRA can be combined with the US Department of Housing and Urban Development’s recent fair housing rule and other anti-poverty programs to combat concentrations of poverty.