Bankers to get a second shot at CRA.

Federal banking agencies within weeks will issue for comment a second proposed r evision to the Community Reinvestment Act that strips away many of the requirements that banks didnt want. Sources from the FDIC, Fed and OTS corroborated the announcement Aug. 23 made by Stephen M. Cross, OCCs deputy comptroller for compliance management, that regulators wou ld probably be asking for [bankers and community leaders] assistance again by publishing a n ew proposal for public comment within the next four to six weeks. Cross revealed the plans for a second comment periodsomething the OCC didnt want in remarks before the Federal Reserve Bank of Dallas conference. Among the changes to the December 1993 proposal, Cross said, data collection wou ld probably be simplified. This could be done by eliminating redundancies in reporting of ho me mortgage lending data and by addressing other specific concerns from the comment letters, he said. Separate home mortgage reporting for CRA purposes would probably be dropped and home mortgage data would be analyzed using the information already collected under HM DA. Small business and farm loan collection would also be simplified. The reporting requir ement for consumer loans would be eliminated and would permit optional collection of consu mer loan data for banks whose owners wish to have those data considered as part of a CRA exam, he said. Cross stated in his speech that the lending test would probably be modified ... to address criticism of market-share calculations in comment letters. Where appropriate, he said, exa miners would include market-share calculations in their analysis to provide a context in whic h to evaluate the banks CRA performance. However, the market-share calculation alone would not determine the banks rating under the lending test or its composite rating. Rather, in forming a judgment of a banks l ending performance, he said, examiners would evaluate lending by the location of the lo ans originated and outstanding, income levels of individual borrowers, size of a small business , amount of community development lending, and extent to which the bank has used innovative or flexible underwriting to expand lending to low- and moderate-income borrowers. Cross suggested that the small bank assessment option in the December proposal w ould be retained, but probably without certain criticized provisions, such as the 60% lo an-to-deposit standard. Wholesale and limited purpose institutions would be evaluated on their community development lending as well as community development investments and services.