Finance
What is the 'Community Reinvestment Act' (CRA) and how does it affect lending in Hawaii?
AA. A law requiring all Hawaii lenders to make loans to minority borrowers regardless of qualification
BB. A federal law encouraging banks and savings institutions to meet credit needs of all segments of their communities, including low- and moderate-income areas; evaluated in bank regulatory exams✓ Correct
CC. A law creating community banks in Hawaii to serve underserved areas
DD. A federal program providing grants to Hawaii communities for housing development
Explanation
The Community Reinvestment Act (CRA) requires federally regulated banks to affirmatively meet the credit needs of their entire service areas, including low- and moderate-income (LMI) neighborhoods. Regulators evaluate CRA performance during bank examinations. Strong CRA performance affects banks' ability to merge or open branches. For Hawaii, CRA encourages lending in rural and lower-income communities.
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