The Community Reinvestment Act in the Age of Fintech and Bank Competition

'Conversely, mounting evidence suggests the CRA is either ineffective or damaging. Before the financial crisis, community groups touted the act’s influence in lowering lending standards. Empirical research also shows that banks’ risk taking increases ahead of their CRA evaluations — contravening the CRA’s requirement that lending be consistent with bank safety and soundness. In cases where CRA lending is not riskier, evidence suggests that banks may be “skimming the top” — lending to high-income residents of low-income communities, thus meeting their regulatory mandate but failing to reach the people the CRA intends to help.'