ABSTRACT
Since its enactment almost thirty years ago, the Community Reinvestment Act (CRA) has been a controversial law. To advocates of CRA, the law is one of the few policies that appear to work in favor of communities and households that suffer from a whole host of disadvantages in housing and small business credit markets. Deregulationists and some bankers argue that banking is not fundamentally different from any other market and that CRA amounts to unwise intervention in the private marketplace. The deregulationists tend to operate from a highly ideological perspective of rejecting government involvement in banking unless blatant, intentional, and easily detected geographic discrimination occurs. They sometimes add that fair lending laws should be sufficient to deal with what they imply are rare occurrences of such discrimination (Shadow Financial Regulatory Committee 1994). Some banks, typically smaller ones, argue that CRA is an expensive, burdensome regulation, and that their banks are somehow inherently responsive to the credit and service needs in their communities.
