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| February 10, 2012 |
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 The Community Reinvestment Act Fulfills Its Promise
by Lew Sichelman
Between 1993 and 1998 alone, Treasury said, more than $600 billion has been lent to low and moderate-income borrowers in the communities covered by CRA. "The study is further evidence that a strong Community Reinvestment Act is critical to ensuring that all neighborhoods are part of our national economic prosperity," said Treasury Sec. Lawrence Summers. "It takes capital to build a village," Sec. Summers added in a play on Hillary Clinton's favorite homily, "It takes a village to raise a child." The department was required to evaluate the law's impact as part of last fall's banking legislation. A second review is required in two years. The requirements was part of a compromise between the White House and Senate Banking Committee Chairman Phil Gramm, R-Tex., an outspoken opponent of CRA. Treasury's study focused on lending trends in 305 cities in the five-year, '93-'98 period. It found that: Lenders covered by the CRA primarily specialize in lending to borrowers without impaired credit. And at a time when lending to low and moderate-income borrowers with faulty credit in the so-called "subprime" sector drove growth for institutions not covered by CRA, banks still were able to boost their share in prime lending to these individuals. In 1993, such lenders accounted for 66 percent of prime mortgage loans to these borrowers and areas. By 1998, their market share had increased to 71 percent. In 84 percent of the metropolitan areas studied, moreover, CRA-covered lenders and their affiliates increased the share of their mortgage lending to low and moderate-income borrowers and areas by as much as 12 percentage points. The study also found that from 1996 to 1998, the first three years for which data was collected, lending by CRA-covered institutions to small businesses located in low and moderate-income communities averaged $33 billion annually. In addition, community development lending by these institutions averaged $17 billion annually. Published: April 24, 2000 Use of this article without permission is a violation of federal copyright laws. 
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The Community Reinvestment Act, the 1977 law that requires all banks carrying federal deposit insurance to lend in underserved neighborhoods where they have branches, has worked as originally envisioned, according to a Treasury Department report released last week.