Seeking to encourage lending rather than paperwork, New York regulators have revised the community reinvestment requirements for state-chartered banks.

As of Dec. 3, the New York State Banking Department will grade institutions on their lending, service, and investment in the community. The new rule closely parallels the recently revised federal Community Reinvestment Act regulation, which became fully effective in July.

However, the rules diverge in two areas. First, banks that operate in parts of New York state with little affordable housing may earn credit for financing middle-income housing. Also, New York will give banks extra credit if they provide enhanced low-cost checking accounts. A separate law already requires banks to offer accounts with low balance requirements, low monthly fees, and at least eight free withdrawals per month.

"Banks asked for clear, reasonable guidelines, and less paperwork while communities wanted financial institutions to make meaningful investments in underserved neighborhoods," said Elizabeth McCaul, acting New York superintendent of banks. "Both should be pleased by the new CRA regulations."

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