Which regulation requires federal regulators to assess the record of each bank or thrift in helping to fulfill its obligations to the community?

• A. Truth in Lending Act
• B. Equal Credit Opportunity Act
• C. CRA
• D. Fair Housing Act

Answer: (C)

The regulation is the Community Reinvestment Act. It requires federal regulators to assess how well a bank or thrift is meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, through lending, investment, and services. Regulators such as the OCC, FDIC, and Federal Reserve conduct periodic CRA examinations and assign ratings that reflect the institution’s performance in these areas. These assessments can influence decisions on mergers, branch openings, and other activities, tying supervisory actions to the institution’s community focus.

Other regulations cited have different aims: Truth in Lending Act focuses on clear loan disclosures to consumers; Equal Credit Opportunity Act prohibits discrimination in lending; Fair Housing Act prohibits discrimination in housing. None of these require the regulator-led, broad community-needs assessment and rating that CRA provides.