Bringing Opportunities to Challenged Neighborhoods

SINCE 1977, FINANCIAL INSTITUTIONS HAVE BEEN ADHERING TO THE COMMUNITY REINVESTMENT ACT TO IMPROVE LENDING AND INVESTMENTS IN LOCAL COMMUNITIES, ESPECIALLY IN URBAN AREAS.

By Larry Feld, Contributing Writer On Feb 4, 2026

In the mid-1970s, Congress, keenly aware that redlining practices were stifling economic growth and encouraging further decay in America’s urban areas, passed legislation encouraging financial institutions to have “skin in the game” regarding the economic success of the communities they serve.

Sponsored by Wisconsin Democratic Senator William Proxmire, the Housing and Community Development Act of 1977 was signed into law by President Jimmy Carter. The bill included the Community Reinvestment Act (CRA), creating guidance for financial institutions to improve their lending and investments in local communities. It also established the Urban Development Action Grant and expanded existing Community Development Block Grant programs.

“I think their main goal (in 1977) was to counteract redlining, where they [financial institutions] would say, ‘We’re not lending here, we’re not lending there,’” explains Mayra Rinaldi, executive vice president, corporate governance and culture for Columbia Bank.

“The CRA rule really embodies a principle that banks, granted a federal charter and deposit insurance, have an obligation to help meet the credit needs of all communities, including those low-income neighborhoods, which is consistent with safe and sound operations of a bank,” she notes.

Why is this important? “Because CRA ensures fair access to credit, promotes economic development, helps stabilize low- and moderate-income neighborhoods, and holds banks accountable for reinvesting back into their communities,” explains Yvonne Louro, CRA officer for Kearny Bank.

Oversight for the CRA is shared by the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC), which hold collective responsibility for ensuring financial institutions comply with the rules under the CRA. Oversight duties are based on the size and charter of the institution.

“The OCC handles CRA compliance for national banks,” Louro explains. “The Federal Reserve is for state-chartered member banks, and the FDIC is for state-chartered, non-member banks.”

Recent Modernization Attempts

The CRA rules have been reviewed and updated over the years, with the last major change occurring in 1995. However, the lending business has changed dramatically since then, including the rise of internet banking, ATMs, and national mortgage providers.

To address these changes, the three agencies (the Federal Reserve, FDIC, and OCC) issued a new Final Rule in October 2023 that builds on the CRA’s foundation. While well-intentioned, the 2023 rules were rescinded in April 2025 after considerable comment and objections from the financial community. As a result, banks continue to follow the 1995 rules.

Applying Creativity to Unique Community Needs

Financial institutions are subject to periodic CRA compliance reviews, and plans must be available to the public. While mandatory, banks are eager to share their plans and results, often aligning CRA efforts to strategic goals. Plans are available to the public.

Compliance is complex. “We track, monitor, and review the lending, services, and investments of our entire communities,” notes Louro. “Kearny Bank adheres to the CRA by assessing community credit needs. We align our lending, investment, and service strategies to meet those needs,” notes Louro.

“We have a dedicated CRA strategy and oversight group that reports into the corporate social responsibility office,” adds Bernadette Mueller, chief corporate responsibility officer at Valley Bank. “Our CRA strategy is not isolated or unique. It is aligned with our business strategy. It is very robust. We are creating relationships with our key stakeholders, our communities, and our clients, as well as our associates, and of course, our shareholders,” notes Mueller.

It is a studied approach. Mueller adds that, “Without really engaging and understanding and assessing needs, you cannot have a robust program because you can’t be responsive if you don’t understand what the needs are.”

Institutions have embraced a spirit of active engagement and inspired creativity in their efforts. For example, Columbia Bank offers financial literacy sessions to teach strategies for improving credit scores. Other sessions prepare potential first-time homebuyers before they start the application process.

“We have our Affordable Housing Program, which provides a discounted interest rate and no private mortgage insurance payments for low-to-moderate income (LMI) borrowers,” says Columbia’s Rinaldi. Working with the Federal Housing Administration’s FHA program, Columbia can offer homebuyers flexible underwriting standards, low down payments, and relaxed dependence on credit score requirements. The institution also offers an Access Homeownership Grant, providing low- and moderate-income first-time homeowners a grant that can be applied to their down payment or closing costs.

Meanwhile, the Columbia Bank Foundation provides Meanwhile, the Columbia Bank Foundation provides grants and sponsorships to non-profits for developing affordable housing. A separate entity of the bank, the Foundation provides approximately 30% of its annual grant funds to affordable housing efforts.

Beyond lending, Columbia also hosts housing network events, gathering supportive housing organizations, developers, and other key stakeholders to discuss the latest housing trends, needs, and opportunities. “They are great events,” notes Rinaldi.

Valley Bank has also made significant CRA-qualified investments in New Jersey neighborhoods.

“Last year, we had about three-quarters of a billion dollars in CRA-qualified investments,” notes Mueller. “This includes the NRTC, or Neighborhood Revitalization Tax Credit Program, run by the Division of Community Affairs. I am proud to say that Valley Bank has a community development entity that applies and receives new market tax credit allocations,” Mueller explains.

In 2024, the bank provided $9.6 million in new market tax credit equity that supported the rebuilding of a 54,000-square-foot, $28 million facility for Straight and Narrow in Paterson, operated by Catholic Charities.

“They had a devastating fire back in 2019. The new facility (opened in December 2025) houses an opioid treatment center, a commercial kitchen, recreation space, warehousing, as well as a long-term residential treatment and other outpatient services,” Mueller notes.

Funding partners included New Jersey Community Capital Building America CDE (a division of the AFL-CIO Housing Investment Trust), Dudley Ventures Community Investment, as well as additional grants from the State of New Jersey.

Creating 91 full-time jobs – half of which will go to low-income individuals – the rebuilding project created 143 FTE construction jobs and will serve 1,600 people a year.

At Kearny Bank, Louro explains that the institution invests in promoting financial literacy and community education. The bank participates in Read Across America, a national early literacy and financial awareness program for young students, as well as partnering with Junior Achievement. It also offers a hands-on experience for middle and high school students to learn about budgeting, savings, and real-world decision-making. The institution also offers financial education tailored to seniors, helping them navigate topics such as fraud prevention and avoiding scams that target older adults.

“We’re really committed to empowering individuals across all age groups with the knowledge and tools they need to achieve financial well-being,” Louro says.

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