October 12, 1977: Congress Passes the Community Reinvestment Act to help Remedy Redlining

The Community Reinvestment Act was created on October, 12, 1977 with the intent to diminish redlining as a bank practice. Prior to the passage of this Act, banks were able to exclude low-income areas as investment “hazards,” allowing for racist financial practices that kept heavily minority areas from getting bank loans (Berry and Romero, n.d, par. 1).

The Community Reinvestment Act (CRA) “encourages banks and thrift institutions to serve the convenience and needs of the communities in which they are chartered to do business” which now included areas of low-income and minority residents (Berry and Romero, n.d., par. 1). Specifically, this Act graded banks on their number of loans given to low-income individuals, which was later expanded to include investment in low-income housing developments (Berry and Romero, n.d., par. 3).

According to a study done by WFAA, banks were now allowed to invest in low-income housing in addition to low-income loans, but banks in Dallas focused on the housing investment. Despite the intention to create equal financial opportunity, and the requirement that bank-funded apartments serve the public good, banks have been financing housing developments in high crime areas of South Dallas where people shouldn’t be incentivized to live. This is bad for the community, who are feeling the effects of the crime despite the fact that the policy was meant to help low-income areas prosper in areas that have an existing revitalization plan. This is not happening, however, with 44 apartment buildings in South Dallas that are not in revitalization areas (Schechter, Trahan, and Horner, 2021).

In addition to the bank’s ability to fund these apartment complexes, they are being given a tax credit that goes back into the bank’s pocket after they invest in the low-income housing. Banks are being incentivized to invest in these harmful housing practices as opposed to giving out low-income loans that would directly benefit the individuals in the community. While the CRA had good intentions, it allowed for more subtle forms of redlining that are still harming the residents of South Dallas despite the knowledge of the issues they are facing (Schechter, Trahan, and Horner, 2021).

To learn more about how the CRA caused a housing crisis in South Dallas, watch WFAA’s story:

If you would like to skip ahead on the timeline to topics related to redlining in Dallas, click on the topic below:

The U.S. House Financial Services meet with community members and leaders to discuss the issue of redlining in Dallas that persists despite federal policies:


Berry, M., & Romero, J. (n.d.). Community Reinvestment Act of 1977. Federal Reserve History. https://www.federalreservehistory.org/essays/community-reinvestment-act 

Schechter, D., Trahan, J., & Horner, C. (2021, February 5). ‘You’re only crippling us’: Banks own many of Dallas’ low-income, high-crime apartments — and they’re rewarded for it. Wfaa.Com. https://www.wfaa.com/article/news/local/investigates/banking-below-30-banks-own-dallas-low-income-high-crime-housing-incentives/287-e49aa69d-9bd1-4072-aaa8-c50f47ac0af2