What aspect of lending does the Community Reinvestment Act directly address?

The Community Reinvestment Act (CRA) directly addresses community needs and revitalization by encouraging financial institutions to meet the credit needs of the communities in which they operate, particularly low- and moderate-income neighborhoods. The purpose of the CRA is to combat redlining—historically, the practice of denying financial services to specific geographic areas based on the racial or ethnic composition of those areas. By emphasizing community engagement, the CRA aims to ensure that banks and lenders contribute to the overall economic health of the regions they serve, fostering local development and providing access to credit for those who may be underserved.

This act promotes financial institutions to invest in their communities, which can include funding community development projects, affordable housing, and small businesses, ultimately aiming to revitalize economically distressed areas. The CRA establishes a framework for evaluating a lender's performance in serving the credit needs of their community, highlighting its central focus on community needs and revitalization initiatives.