|The Community Reinvestment Act (CRA) requires the federal financial institution supervisory agencies, in connection with their examinations of certain depository institutions, to assess the institutions' CRA performance. A financial institution's performance in helping to meet the credit needs of its community is evaluated in the context of information about the institution (capacity, constraints and business strategies), its community (demographic and economic data, lending, investment, and service opportunities), and its competitors and peers. 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.
The National Community Reinvestment Coalition, which advocates for greater reinvestment by banks in low- to moderate-income neighborhoods has drafted legislation that would take DeSoto’s current CRA requirements located in its Investment Policy and put them into its own ordinance.
New requirements could include requiring banks to submit loan data during the RFQ process to show how much lending occurs in low- to moderate-income neighborhoods as well as requiring the submission of a reinvestment plan that sets targets for future lending. Local governments may elect to establish oversite bodies to evaluate banks, publish their findings, and to conduct community hearings.