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December 2016

Focus On … Serving Financially Underserved Communities

Bankers in Greensboro, N.C. attend a Richmond Fed Community Reinvestment Act training program.

Economically disadvantaged communities often lack significant business activity, access to capital and the asset building that encourages job creation and affordable housing options and may help reduce poverty. Community development encourages the use of local resources to enhance economic opportunities while improving social conditions in a sustainable and holistic way that encourages local participation.

Decades ago, our nation’s leaders passed multiple legislative initiatives to reduce discrimination in the credit and housing markets and encourage local activities to help develop low- and moderate-income neighborhoods. Many of these initiatives specifically addressed discriminatory practices of financial institutions across the country, such as prevalent redlining, a common practice where banks would deny credit to individuals based on where they lived. The Community Reinvestment Act of 1977 (CRA) directs regulators to encourage bank loans and investments in underserved communities.

The Federal Reserve, the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) created regulations that set performance criteria for banks of different sizes and business models. These agencies also provide guidance on how CRA rules are applied and evaluate the extent to which each financial institution helps to meet the credit needs of its community. The performance ratings of financial institutions are publically available and are used by regulators to evaluate financial institutions’ applications for mergers and acquisitions, and the opening of new branches. The transparency of the ratings supports community participation.

Community Development’s Jeanne Milliken Bonds leads a Community Reinvestment Act program in South Carolina.

The Fed’s community development function — consisting of individual community development departments at each of the 12 Reserve Banks and the Board of Governors — was originally conceived with a focus on supporting CRA efforts and promoting fair and informed access to financial markets for communities and individuals, and recognizing the particular needs of underserved populations. 

Now, the community development function at Reserve Banks also convenes stakeholders to collaborate on community and economic development initiatives, conduct and share applied research, and identify emerging issues. The Reserve Banks work with the OCC and the FDIC to convene financial institutions, community based organizations and others to continue learning and advancing innovation with the CRA. 

“CRA-related activities bring billions of dollars in capital to help underserved communities nationwide. But new challenges can develop as communities change and age,” said Richmond Fed Community Development Regional Team Leader Jeanne Milliken Bonds.

“CRA was designed to be broad, flexible and responsive to changes in communities,” Bonds explained. “Through our collaborations with key community partners, we can have greater influence and impact in helping to improve the development landscape in these underserved communities.” 

One of the most recent initiatives by the Fed’s community development arm is the development of CRA-based online training videos. The online training includes an Introduction to CRA and for the Small Bank and Intermediate Small Bank CRA Examination, with additional videos to be available in the coming months.

Other community development resources are available at

Contact Us

Laura Fortunato
(804) 697-8196
(804) 698-0927 (mobile)