CRCM Community Reinvestment Act (CRA) Compliance

Question 1

What is the primary purpose of the Community Reinvestment Act (CRA)?

Accepted Answer

To encourage banks to help meet the credit needs of the entire community, including low- and moderate-income areas

Answer

To require banks to report loan data by race and gender

Answer

To establish minimum capital requirements for banks operating in underserved communities

Answer

To mandate that banks offer accounts to all applicants regardless of creditworthiness

Question 2

Under the CRA, a bank's assessment area is primarily defined by:

Accepted Answer

The geographies surrounding the bank's main office, branches, and deposit-taking ATMs

Answer

All counties in the state where the bank is chartered

Answer

Only the zip codes where loans were made in the past year

Answer

The entire metropolitan statistical area of the bank's headquarters city

Question 3

Which of the following is NOT one of the three performance tests applied to large banks under CRA?

Accepted Answer

Capital Adequacy Test

Answer

Lending Test

Answer

Service Test

Answer

Investment Test

Question 4

A bank that receives a CRA rating of 'Needs to Improve' is MOST likely to face which consequence?

Accepted Answer

Increased regulatory scrutiny and potential delays or denials on applications for expansion

Answer

Immediate closure of all branches in low-income areas

Answer

Loss of federal deposit insurance within 90 days

Answer

Mandatory reduction of all loan interest rates to below-prime levels

Question 5

The four CRA performance rating categories are:

Accepted Answer

Outstanding, Satisfactory, Needs to Improve, Substantial Noncompliance

Answer

Exceptional, Outstanding, Satisfactory, Needs Improvement

Answer

Superior, Acceptable, Marginal, Unsatisfactory

Answer

Excellent, Good, Fair, Poor

Question 6

Which type of bank is evaluated solely under a community development test rather than the standard lending, investment, and service tests?

Accepted Answer

Wholesale or limited purpose bank

Answer

Small bank

Answer

Intermediate small bank

Answer

Large retail bank

Question 7

Under CRA, a 'low- and moderate-income' (LMI) census tract generally refers to one where median family income is:

Accepted Answer

Less than 80% of the area median income

Answer

Below 50% of the area median income

Answer

Below the federal poverty level for a family of four

Answer

Less than 120% of the national median income