WASHINGTON - Regulators plan to give the industry about 18 months to comply with the revised Community Reinvestment Act rules, Federal Reserve Board Governor Lawrence B. Lindsey said.
Assuming the Fed and the other bank regulatory agencies approve the proposal in late February, as expected, bankers won't have to begin complying with the new rules until August 1996.
The agencies need the extra time to train their examiners, said Mr. Lindsey, who has been the Fed's point man on CRA reform.
Mr. Lindsey and Comptroller Eugene Ludwig also said the agencies are still grappling with a proposal to require banks to report the race and gender of small businesses and farm borrowers.
Mr. Ludwig said he is sympathetic to bankers who say they don't need the additional data because they already perform well in the small business arena. But regulators added the provision at the request of other banks, who said they need the information to police themselves, he said.
"I think this is an area where banks have a very good story to tell," Mr. Ludwig said, adding that this does not represent a change in his position.
A host of refinements also are in the works, the two regulators said.
Both said the agencies are grappling with the so-called assessment context, the provision that requires regulators to determine the credit needs of each bank's service area.
Mr. Ludwig said regulators are considering an industry proposal to give banks the option to conduct the assessment context themselves. But he said other bankers are adamant that regulators should handle the chore.
"We are thinking long and hard on how we can work with both constituencies," Mr. Ludwig said.
This assessment context will tax the regulators greatly, forcing the Fed alone to hire 50 additional compliance examiners, Mr. Lindsey said.
"It is a consideration that affects the regulators more than it affects the banks or the community groups," Mr. Lindsey said.
Regulators also are still working on the final public disclosure requirements for banks that choose the strategic plan option, which will allow institutions to design their own CRA plan with public input, Mr. Lindsey said.
The agencies are also tinkering with the wholesale bank option, which provides these limited-service corporate lenders with their own test. The current proposal says that for each $1 invested in the community, wholesale banks can get $1 of CRA credit for a loan outside the community.
Mr. Ludwig said regulators may eliminate that fixed formula, and adopt a more flexible one.
Mr. Lindsey also said the regulators probably will not change the proposed $250 million in asset cutoff for an expedited examination procedure. The Independent Bankers Association of America has advocated doubling the threshold.
But Mr. Ludwig said the agencies may allow independently run small banks to qualify, even if they are part of a bank holding company with assets exceeding the $250 million threshold.
And he said regulators were surprised that some in the banking community believed that the revised proposal downplays fair lending.
"We want to make sure that the fair-lending concerns continue as they have in the status quo and in the previous two drafts," Mr. Lindsey said.
Mr. Lindsey said the truly hard work will come when the agencies devise the guidelines that show their examiners how to implement and interpret the new rules.
"That is going to be a major, major job," he said.
The regulators have taken a systematic approach to revising the rules, Mr. Lindsey said. The staffs meet frequently to hash out each issue. They then write out summaries, explaining the various options.
The principals - Mr. Lindsey, Mr. Ludwig, Office of Thrift Supervision acting director Jonathan Feichter, and Federal Deposit Insurance Corp. Chairman Ricki Tigert Helfer - will meet this week to consider a comprehensive draft of the rules.
Regulators, who have worked on this issue for the past 18 months, are expected to unveil the final rule in about a month, with the Federal Reserve tentatively scheduling a Feb. 22 meeting on the topic.
