curb the Community Reinvestment Act, bankers are blasting their regulators for underestimating the time it takes to comply with the 1977 law.

According to the four federal banking agencies, the industry devotes 1.25 million hours a year to collecting data on loans covered by the controversial law, which is playing a pivotal role in the debate over financial reform legislation.

Though regulators have increased their compliance-time estimates by 500% in the last year, the estimates are still far too low, according to Paul A. Smith, senior federal administrative counsel of the American Bankers Association.

Bankers are buried'' by new demands for documentation of community development loans, investments, and service, Mr. Smith said.

Sen. Gramm agrees, and also plans to weigh in.

The Senate Banking Committee chairman has his staff analyzing the agencies' estimates, which range from 10 hours a year for small banks to 635 hours for large ones. Regulators have a fatal lack of data on what it takes to comply,'' a Senate Banking Committee spokeswoman said Thursday.

In their request for comments on the estimates, the regulators conceded that the number of institutions consulted was too small to enable the agencies to make useful projections regarding CRA burden industry wide.''

A federal law designed to cut red tape requires agencies to get permission every three years to collect data from the private sector. Agencies must estimate compliance times and put the request out for public comment. The banking agencies -- the Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of Currency, and Office of Thrift Supervision -- first attempted to renew the CRA data- collection request last year. But criticism forced them to increase the estimate in May.

In comment letters filed in late July, industry groups said the second estimate still falls short of reality. The figures are too vague to be considered valid, according to Steven I. Zeisel, senior counsel at the Consumer Bankers Association.

The estimates of the time to comply were not developed in any rigorous way, and lack even the most elementary explanation of their basis,'' Mr. Zeisel wrote.

Critics also took the opportunity to underscore broader concerns with CRA compliance. The inaccuracy of the estimates notwithstanding, we question the value of the data collected under this regulation,'' wrote Charlotte M. Bahin, a regulatory counsel at America's Community Bankers.

Robert N. Barsness, chairman and president of Prior Lake (Minn.) State Bank, said the compliance burden falls disproportionately heavily'' on smaller banks. Thousands of branches of large banks, which individually can be larger than a competing community bank down the street, will never see a CRA examiner,'' wrote Mr. Barsness, who is also president of the Independent Community Bankers of America.

Many smaller institutions do not have separate compliance departments, added Robert G. Rowe, the ICBA's regulatory counsel. The more time spent on compliance, the less time you have to spend with a customer,'' he said.

All four agencies estimated that small banks and thrifts spent an average of 10 hours per year complying. Small institutions are defined as those with less than $250 million of assets that are not affiliates of holding companies with more than $1 billion of assets.

Burden estimates for larger institutions ranged from 554 hours by the OTS to 635 hours by the Fed.

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