D'Amato May Forgo A Rewrite Of the CRA

WASHINGTON - Senate Banking Committee Chairman Alfonse M. D'Amato said the panel may defer to the Clinton administration and leave the Community Reinvestment Act alone.

"I don't want to see a war that would prevent us from enacting all the good that's been done in this (regulatory relief) bill," the New York Republican said Tuesday.

The administration is adamantly opposed to new CRA legislation.

Sen. D'Amato's comment puts him at odds with Sen. Richard Shelby, R- Ala., who said at a Senate Banking financial institutions subcommittee hearing Tuesday that the Clinton administration hadn't gone far enough in overhauling CRA rules.

Sen. Shelby, who chairs the subcommittee, and Sen. Connie Mack, R-Fla., are sponsoring a regulatory relief bill. Its provisions include exemption for small banks from the reinvestment law and a shield from community-group protests for institutions with good CRA ratings.

Bank regulators testifying at the hearing praised most of the reforms in the Shelby-Mack bill but were unanimous in urging legislators to keep their hands off the CRA rules.

"To take up CRA reform in the legislative sphere at this time will extend a period of uncertainty that banks, community groups, and regulators alike have been eager to bring to an end," Comptroller of the Currency Eugene A. Ludwig said.

"We would ask the Congress to give the new regulations a chance to prove that they can work," added Federal Deposit Insurance Corp. Chairman Ricki Helfer. She said the newly approved CRA regulation creates streamlined examinations as well as exemptions from data collection reports for small banks.

Ms. Helfer also argued that safe harbors for banks with good CRA marks are not needed, because in 1994 only eight out of 2,749 applications submitted to the FDIC were the subjects of protests. Bankers say community groups can tie up applications for months, even for institutions that received high CRA marks.

Regulators also criticized a provision in the bill that would allow examinations of small FDIC-insured banks only every two years.

"Two years is simply too long, in our view, for a bank of any size to go without examiner oversight," said Assistant Treasury Secretary Richard S. Carnell. "In two years, the local economy or interest rates can change dramatically, or management could be replaced."

Currently, depending on an institution's size and examination rating, regulators can choose to examine banks under $250 million in assets every 18 months. Banks with assets over $250 million generally must be examined annually.

Jonathan L. Fiechter, acting director of the Office of Thrift Supervision, applauded a provision in the bill that would lighten requirements that thrifts invest the majority of their assets in housing- related loans.

The law now requires thrifts to pass two separate tests. Under Shelby- Mack, they would qualify by passing only one of the two.

"Savings associations expend substantial resources tracking and computing two tests," Mr. Fiechter said. "One 'thrift test' should be sufficient."

Sen. D'Amato said he hoped to add a provision to the bill that would clarify lenders' liability when property they hold as collateral turns out to be contaminated.

Companion legislation to the Shelby-Mack bill was introduced in the House by Rep. Doug Bereuter, R-Neb. The measure would exempt banks with less than $100 million in assets located in communities of fewer than 30,000 people.

However, the House bill would also allow banks under $250 million in assets to "self-certify" that they are in compliance with CRA. Hearings on the Bereuter bill are scheduled to begin May 18.

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