Community Reinvestment Act: Preliminary Results of GAO's Study on CRA Problems and Proposed Reforms

Pursuant to a congressional request, GAO discussed the implementation of the Community Reinvestment Act (CRA). GAO noted that: (1) CRA requires bank regulators to assess banks' community lending performance during examinations; (2) community groups urged the passage of CRA to curb what they believed to be a lack of adequate investment in low- and moderate-income areas; (3) community groups have raised concerns about limited CRA enforcement and insufficient disclosure of information on banks' community lending performance; (4) bank regulators have proposed reform initiatives to clarify bank performance standards, make assessments more consistent, improve enforcement, and reduce the cost and burden of CRA compliance; (5) successful implementation of the proposed reforms can be achieved if regulators provide clear guidance and comprehensive training for all examiners performing CRA assessments; (6) many bankers, regulators, and community groups have taken part in a variety of initiatives to improve banks' community lending practices; (7) through these initiatives, many banks have been able to overcome lending barriers; (8) some regulators are developing new techniques to reduce bank examination time or shift the responsibility for conducting such analyses to the banks; and (9) some bankers have lowered the high transaction costs and credit risks of community development loans by sharing those costs and risks through multi-bank programs.