Issues in CRA Reform

Last July, the Clinton administration urged federal bank and thrift institution regulators to propose new rules for implementing the Community Reinvestment Act (CRA), a law that was enacted in large part to discourage mortgage lenders from redlining disadvantaged communities. In asking for a less burdensome and more objective lenderevaluation process, the President noted that both lenders and community advocates have been dissatisfied with the results of more than 15 years of CRA regulation. The President’s request follows a period of intense nationwide examination and debate about housing credit discrimination. This Economic Commentary discusses the prevailing CRA environment and reviews some of the related issues that remain to be resolved.