The Community Reinvestment Act (CRA) is a federal law enacted in 1977 to encourage depository institutions to meet the credit needs of low- and moderate-income neighborhoods.
What is the purpose of Ffiec?
The Federal Financial Institutions Examination Council (FFIEC) is a formal U.S. government interagency body composed of five banking regulators that is “empowered to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions“.
Was the Community Reinvestment Act successful?
Other studies find that the CRA has been effective in encouraging financial institutions to lend to redlined neighborhoods. Several analyses conclude that the CRA had a positive influence in encouraging lending to low- and moderate-income borrowers and in low- and moderate-income neighborhoods.
How did the Community Reinvestment Act affect the US economy?
The Community Reinvestment Act encourages bank lending to low- and moderate-income neighborhoods. Enacted in 1977, it sought to eliminate bank “redlining” of poor neighborhoods. That had contributed to the growth of ghettos in the 1970s. In redlining, neighborhoods were designated as not good for investment.
What has been the lasting impact of the Community Reinvestment Act?
Supporting the conclusion that the CRA has a positive effect, the analysis found that in CRA-designated census tracts, there were lower vacancy rates, higher homeownership rates and higher growth in owner-occupied units than would have been predicted when compared with changes in the census tracts that were not CRA- …
Who needs to comply with FFIEC?
- State-chartered banks that are members of the Federal Reserve System.
- Bank holding companies.
- Thrift holding companies.
- Foreign banking organizations that have a:
What's the purpose of the Community Reinvestment Act quizlet?
Is intended to ENCOURAGE depository institutions to help meet the credit needs of the communities in which they operate, including LOW- and MODERATE-INCOME NEIGHBORHOODS, consistent with safe and sound banking operations. You just studied 27 terms!
Who does the Community Reinvestment apply to?
Institutions Covered by CRA CRA applies to FDIC-insured depository institutions, such as national banks, savings associations, and state-chartered commercial and savings banks.
Why was the Community Reinvestment Act of 1977 criticized after the onset of the Great Recession?
Critics were concerned the law would create distortions in credit markets and result in credit allocation by the federal bank regulators. They also noted an already heavy regulatory burden, and felt the CRA would encourage riskier lending.
What qualifies as a CRA loan?
A home mortgage loan, small loan to a business, small loan to a farm, or consumer loan is a qualifying activity if it is: A small loan to a farm located in a low- or moderate-income census tract. F-1 Small loan to a farm located in a low-income census tract to purchase farm equipment.
Article first time published on
What is a CRA strategic plan?
In lieu of one of the three primary evaluation methods, the CRA regulations provide banks the option to develop a strategic plan with the input of the community. Strategic plans allow banks to tailor their performance goals to the needs of their community by working directly with the community to develop the goals.
When you take out a mortgage your home becomes the collateral?
When you take out a mortgage, your home becomes the collateral. If you take out a car loan, then the car is the collateral for the loan. The types of collateral that lenders commonly accept include cars—only if they are paid off in full—bank savings deposits, and investment accounts.
What was the Community Reinvestment Act of 1977 quizlet?
The Community Reinvestment Act (CRA), enacted by Congress in 1977 and implemented by Regulations 12 CFR parts 25, 228, 345, and 195, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate.
What is required in the CRA Public File?
A copy of the public section of your bank’s most recent CRA performance evaluation. Your bank must place the copy in its public files within 30 business days after receiving it. … A list of services—including hours of operation, available loan and deposit products, and fees—offered at your bank’s branches.
What are the CRA ratings for banks?
Upon completion of a CRA examination, an overall CRA Rating is assigned using a four-tiered rating system. These ratings are: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance.
Who regulates the CRA?
Three federal regulators—the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), and the Board of Governors of the Federal Reserve System—share an oversight role with respect to the CRA.
What does the CRA rating reflect?
Using Federal Reserve data on a large sample of CRA exams, this analysis found that CRA ratings reflect actual differences in bank performance on the retail lending test and the investment test.
When a bank receives its Community Reinvestment Act CRA rating it reflects how the institution is meeting its responsibilities to whom?
10. What type of performance standard do the agencies generally use to determine an intermediate small bank’s CRA rating? a. B, C, and D are incorrect because the purpose of the CRA rating is to reflect how an institution is meeting its responsibilities to the community it serves.
What is a FFIEC report?
Description: This report collects basic financial data from commercial banks in the form of a balance sheet, an income statement, and supporting schedules. The Report of Condition schedules provide details on assets, liabilities, and capital accounts.
What is an FFIEC check?
FFIEC compliance is conformance to a set of standards for online banking issued in October 2005 by the Federal Financial Institutions Examination Council (FFIEC).
What is an FFIEC audit?
FFIEC overview The FFIEC Audit IT Examination Handbook contains guidance for these examiners to assess the quality and effectiveness of IT audit programs of both financial institutions and TSPs.
What does a CRA officer do?
The CRA Officer develops and implements programs to ensure the Bank meets the needs of the community and attains CRA compliance goals. … Perform periodic review of bank’s assessment areas to ensure reasonableness of the delineation. Perform a Fair Lending Assessment and a Fair Housing Assessment.
Do SBA loans count for CRA?
Loans to businesses, when made as part of the SBA’s 504 Certified Development Company program, automatically qualify for CRA credit as an economic development loan.
Are renewals CRA reportable?
Like loan renewals, renewals of lines of credit are not considered loan originations and should not be collected or reported.
Do SBA 7a loans qualify for CRA credit?
Investment in the Fund can be counted for either Community Development Lending Test or Investment Test credit for CRA. As of September 30, 2021, the Fund had over $700 million of gross assets and over 125 funded investors.
Which CRA test is weighted more heavily?
Evaluations are based on lending, investment and service tests; for most banks, the lending test is weighted most heavily in determining the overall rating.
Can banks choose to be evaluated under a strategic plan?
The revised Community Reinvestment Act (CRA) regulations provide that a financial institution can elect to have its CRA performance evaluated under the strategic plan option. … This information should prove useful to banks both in developing and preparing a strategic plan and understanding the FDIC’s review process.
What happens if a state chartered bank is not in compliance with CRA?
As part of this pro- cess they can hold public hearings to gather additional information not otherwise available. When the regulators deem that a bank fails to comply with the CRA, they can give the institution a less-than-Satisfactory grade on its exam or even delay or deny its application.
Why do lenders ask for collateral while lending?
The lenders ask for a collateral before lending because: It is an asset that the borrower owns and uses this as a guarantee to the lender – until the loan is repaid. Collateral with the lender acts as a proof that the borrower will return the money.
What is the danger of putting up collateral for a loan?
The biggest risk of a collateral loan is you could lose the asset if you fail to repay the loan. It’s especially risky if you secure the loan with a highly valuable asset, such as your home. It requires you to have a valuable asset.
What is the 5 C's of credit?
Understanding the “Five C’s of Credit” Familiarizing yourself with the five C’s—capacity, capital, collateral, conditions and character—can help you get a head start on presenting yourself to lenders as a potential borrower. Let’s take a closer look at what each one means and how you can prep your business.
