In evaluating a bank's CRA performance, to what do bank examiners give the greatest consideration?
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A. B. C. D.D
The Community Reinvestment Act (CRA) is a federal law that requires banks to meet the credit needs of their entire community, including low and moderate-income neighborhoods. The law is designed to prevent discrimination in lending and encourage banks to invest in the communities where they operate.
In evaluating a bank's CRA performance, bank examiners consider several factors, including the bank's lending activity in low and moderate-income neighborhoods, efforts to establish communication with members of the community regarding credit needs, and the participation of the bank's board of directors in formulating CRA policy. However, the extension of credit the bank has made to low and moderate-income borrowers or neighborhoods is the factor that receives the greatest consideration in determining the bank's CRA performance.
Bank examiners review the bank's lending activity and assess whether it is meeting the credit needs of the community it serves. They look at the types of loans the bank has made, the number of loans made to low and moderate-income borrowers or neighborhoods, and the geographic distribution of lending. Banks that make a significant number of loans to low and moderate-income borrowers or neighborhoods are generally viewed as having strong CRA performance.
Efforts to establish communication with members of the community regarding credit needs are also important. Bank examiners assess whether the bank has made a good faith effort to communicate with members of the community and solicit their feedback on credit needs. This could include holding meetings with community groups, participating in community events, or conducting outreach to potential borrowers.
The participation of the bank's board of directors in formulating CRA policy is another factor that examiners consider. Banks that involve their board of directors in the CRA process are viewed as being more committed to meeting the credit needs of their community. The board's involvement could include approving CRA policies, reviewing lending data, or participating in community outreach efforts.
In summary, while all of these factors are important in evaluating a bank's CRA performance, the extension of credit the bank has made to low and moderate-income borrowers or neighborhoods is the factor that receives the greatest consideration. Banks that make a significant number of loans to low and moderate-income borrowers or neighborhoods are generally viewed as having strong CRA performance.