Now that Community Reinvestment Act rules are out, compliance consultants are scrambling to help bank clients adjust to the new requirements.
Although consultants may differ on specific CRA strategies, all agree that the time to start planning is now.
Lucy Griffin, principal of Compliance Management Services, Falls Church, Va., said she warns bankers not to fall prey to the "Rip Van Winkle effect."
"Don't fall asleep, because when you wake up the whole world will be different," Ms. Griffin warned.
Compliance giant Barefoot, Marrinan, & Associates, Columbus, Ohio, this week introduced two "transition kits" to help banks get ready for the new CRA rules, which were adopted by regulators last month.
The kits cost $35, but are free to banks in the 11 states where the trade association endorses Barefoot, said the company's president, Jo Ann S. Barefoot.
The kits summarize the new requirements and answer common questions. They also contain a test banks can take to see how they would fare under the new rules.
Checking a bank's current CRA program against the new rules was common advice.
"You don't need an examiner to ascertain how you're doing," said Warren Traiger, a New York lawyer who follows CRA. In fact, he said, "You need to do it yourself."
While the new rules focus on the loans, services, and investments a bank makes in its community, Ms. Griffin warned senior managers and board directors to remain involved.
"What most concerns me about the new rules is that bank management will say: 'We're off the hook, all we need to do is make loans,'" Ms. Griffin said. "Those kinds of loans don't just happen."
J. Lajuana Miller, a senior consultant with Professional Bank Services in Louisville, Ky., agreed that loan volume is key. But, Ms. Miller said, banks should remember that reaching out to the community is crucial to building a solid business.
Large banks won't be examined under the new CRA rules until July 1, 1997, but can opt in before. Small banks have an earlier deadline: Jan. 1, 1996.
Regulators decided to offer small banks - those with less than $250 million in assets - a streamlined CRA exam.
Ms. Barefoot, who met with bank regulators frequently during the 22 months they spent reforming CRA rules, said small banks will be let off easy.
"Examiners will be trained to give the benefit of the doubt to the community bank," she said.
Larger banks, however, are a different story. For them, the rules are much more complicated. Some may need to buy new computer systems to collect data on small-business lending, Ms. Barefoot said.
Others may want to start considering the strategic plan option, which allows banks to customize CRA goals and be rated on how well they meet them, she said.
Because the new rules focus on lending, Ms. Barefoot said, banks might have to offer new loan products.
Large banks also may have to take another look at their branching strategy in low-income to moderate-income areas, she said.
"You've either got to have the branches there or another way of meeting the needs of people in those areas," Ms. Barefoot said.
