Banking Department

Community Reinvestment Act: Regulation of Bank Compliance

Under the Federal Community Reinvestment Act, banks are encouraged to help meet the credit needs of their local communities. The Act is intended to prevent the practice of "redlining," in which banks do not approve loans to residents and businesses located in low and moderate-income communities. The banks licensed in New York State are required by the State to comply with the Act, and the Banking Department is required to monitor this compliance. We examined the Department's monitoring practices and found that improvements are needed. For example, while Department examiners generally report that banks comply with the Act, the reviews conducted by the examiners may not be thorough enough to support their conclusions. When we examined mortgage loan activity in the metropolitan New York City area, we found possible indications of unfair lending practices that may require further examination by the Department.

For a complete copy of Report 95-S-123 click here.
For a copy of the associated follow-up report click here.