Research Report Bank Lending outside CRA Assessment Areas
Laurie Goodman, Ellen Seidman, Jun Zhu
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The three federal banking regulators—the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board—are revising the regulations of the Community Reinvestment Act (CRA) and are considering how to evaluate lending outside assessment areas. When the CRA was first passed, banks operated mainly within one state, but today bank lending is increasingly regional and national in scope, and internet banks have few or no branches. In this report, we look at banks’ retail lending outside assessment areas, both in relation to how important this lending is to the banking institution and how important this lending is to communities. We find that many banks are doing a significant amount of lending outside assessment areas and that outside assessment area lending is less focused on lower-income people and communities and on small businesses. We suggest how outside assessment area lending could be included in modernized CRA regulations so as to capture most of the outside assessment area loans while imposing a burden on relatively few institutions.

Research Areas Housing finance
Tags Credit availability Federal housing programs and policies Homeownership Housing and the economy
Policy Centers Housing Finance Policy Center