BankAmerica revives call for nonbank CRA.

Should mutual fund companies be subject to banklike community reinvestment standards?

When that idea was floated last spring by a senior Treasury Department official, it set off a round of hand-wringing in the fund business.

The hubbub died down within weeks when the official, Under Secretary Frank Newman, acknowledged that such standards would be difficult to apply.

But now the idea has found a new champion: BankAmerica Corp. chairman Richard Rosenberg. As it happens, Mr. Newman worked for Mr. Rosenberg at BankAmerica before joining the Treasury Department early this year.

Mr. Rosenberg made his case last month at a conference sponsored. by the Federal Reserve Bank of Dallas.

In the 16 years since the Community Reinvestment Act became law, Mr. Rosenberg argued, there has emerged "a parallel banking system comprised of mutual funds, financial companies, and commercial paper markets." These companies, Mr. Rosenberg maintained, have the same obligation as banks to meet the credit needs of distressed communities.

"As part of any banking reforms, Congress ought to consider expanding the scope of Community Reinvestment Act to bring these institutions under its umbrella," Mr. Rosenberg said.

Fund executives see something distinctly ironic in Mr. Rosenberg's proposal. After all, they point out, BankAmerica isn't just the nation's second-largest bank. It's also a big and ambitious player in the mutual fund business. Why subject BankAmerica's fund business to a whole raft of new rules?

No one has yet explained exactly what a mutual fund company would have to do to meet community-reinvestment standards. Mr. Rosenberg didn't elaborate in this speech, and couldn't be reached for comment.

Called an |Extreme Idea'

The push is certainly consistent with an old, familiar theme of banks: the pursuit of a level playing field. Nevertheless, Mr. Rosenberg's comments have raised the fund industry's hackles. Matthew P. Fink, chairman of the Investment Company Institute, said his members were in an uproar when they saw a transcript of Mr. Rosenberg's remarks. "A number of institute members, including some major bank members, were astonished," said. "It's an extreme idea," Mr. Fink added. He has pledged to fight any efforts to expand reinvestment-act requirements to mutual fund companies.

The fund companies appear to have the backing of a key member of the Securities and Exchange Commission.

Commissioner Mary L. Schapiro has argued that the policy reasons for imposing the act on banks simply don't apply to mutual funds. Banks are chartered to serve the needs and convenience of their communities; funds are not, she pointed out in a May letter to the Treasury Department.

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