Creating a Scorecard for the CRA Service Test: Strengthening Banking Services Under the Community Reinvestment Act

Publication Date

March 2002

Author(s)

Kelly Thompson Cochran, Michael A. Stegman, Robert Faris

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The Community Reinvestment Act service test could provide important incentives for banks to serve the unbanked and underbanked populations.

The significant number of families in the United States who do not have a bank account or who use “fringe” financial services to meet their basic credit needs have captured the attention on policy makers in recent years.

The Community Reinvestment Act service test could provide important incentives for banks to serve the unbanked and underbanked populations, but an analysis of almost 2,000 CRA examinations conducted over five years reveals anomalies in services test scores and suggests that subjective and varying criteria are used to assess bank performance.

During their 2002 review of the CRA regulations, policymakers and regulators should strive to strengthen the service test.