Finance
Under the Community Reinvestment Act (CRA), banks are encouraged to:
ALimit lending to high-net-worth borrowers to reduce default risk
BMeet the credit needs of all communities they serve, including low- and moderate-income areas✓ Correct
CInvest exclusively in government-backed securities
DProvide mortgages only to first-time homebuyers
Explanation
The Community Reinvestment Act (CRA) was enacted to encourage banks and thrifts to meet the credit needs of all the communities in which they operate, including low- and moderate-income areas. Banks receive CRA ratings that affect regulatory approvals for mergers, acquisitions, and expansions.
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