Which policy requires banks to loan money in communities where they take deposits to reduce discrimination?

• A. Glass-Steagall Act
• B. Dodd-Frank Act
• C. Community Reinvestment Act of 1977
• D. Fair Housing Act

Answer: (C)

This policy ties banks to the communities where they take deposits and aims to curb discriminatory lending. The Community Reinvestment Act of 1977 requires banks to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods, so lending isn’t withheld from areas based on demographics. Regulators assess how well banks meet these needs and use that information when supervising or approving bank activities, encouraging more equitable lending.

The other policies don’t fit this specific mechanism. The Glass-Steagall Act separated commercial and investment banking and wasn’t about lending in particular communities. The Dodd-Frank Act broadens financial regulation after the 2008 crisis but isn’t a targeted community-lending mandate. The Fair Housing Act prohibits housing discrimination, but it doesn’t require banks to lend in the communities where they take deposits.