Capital Briefs: Ludwig: Low-Doc Loans Won't Hurt Banks

Examiners will not downgrade banks that participate in the Small Business Administration's low-documentation loan program, Comptroller of the Currency Eugene A. Ludwig said Thursday.

Addressing a small-business lending conference sponsored by his agency, Mr. Ludwig said "low-doc" loan files contain enough information on borrowers to meet safety-and-soundness requirements. "You can take full advantage of that program without fear of adverse criticism," Mr. Ludwig said.

The Comptroller also urged more banks to make so-called Part 24 equity investments in community development projects. Part 24 allows well- capitalized banks to invest up to 10% of their capital and surplus in these projects. "It is in your interest-and the small-business community's interest-for banks to take fuller advantage of this program," he said.

Mr. Ludwig also renewed his call for the Federal Reserve Board to amend Regulation B to let banks voluntarily collect data on the race and gender of all borrowers. Currently, banks may only collect such data for mortgages.