Regulatory relief is on a roll.

Despite the protests of community groups, regulators, and the Clinton administration, Congress appears likely to pass sweeping legislation to trim back the rules and paperwork requirements that weigh down banks and thrifts.

In the House, a bill sponsored by Rep. Doug Bereuter, R-Neb., has moved onto the fast track. Rep. Marge Roukema, R-N.J., chairwoman of the House Banking Committee's subcommittee on financial institutions, wants her panel to vote on it next month.

Likewise, a Senate bill sponsored by Richard Shelby, R-Ala., and Connie Mack, R-Fla. is all but certain to pass. The two bills are very similar - both would make the Community Reinvestment Act easier to live with and would scale back paperwork requirements under a number of other laws.

The progress of the Bereuter and Shelby-Mack bills is astonishing, considering the hostility that regulatory relief initiatives faced in past congressional sessions. In those days, no regulatory burden was too great to heap on the industry when Congress felt like addressing a social ill.

Six years ago, for example, Rep. Joseph P. Kennedy 2d, D-Mass., seemed pretty far out with his proposal to force public disclosure of ratings under the Home Mortgage Disclosure Act.

But his amendment passed with votes to spare. Even conservative firebrand Robert Walker stood up in favor of it.

Today, those very same laws are likely to be scaled back dramatically. And perhaps more important to banks, some Republicans are looking for different approaches to regulation that would put insured institutions on a more equal footing with unregulated lenders.

For example, Rep. Bill McCollum, R-Fla., plans to sponsor legislation that would add anti-redlining provisions to the Equal Credit Opportunity Act, while scaling back CRA so that it is a pure disclosure law.

That might sound like a pretty poor deal at first blush. With one hand, Congress giveth; with the other, it taketh away. But the equal credit law may offer some significant advantages over the CRA approach.

First, it does away with lending targets. The regulatory agencies have streamlined CRA, but the new rules place an affirmative requirement on banks to lend in low- and moderate-income communities, seeking out borrowers if none apply. Rep. McCollum would scuttle that requirement and put all enforcement powers in the equal credit law.

The equal credit law does not set specific lending goals. Instead it asks only whether institutions discriminate against loan applicants based upon their ethnicity or race. With the McCollum anti-redlining language added, the law would forbid lenders to discriminate against people because of their neighborhoods' racial characteristics.

"CRA was supposed to attack redlining, but it's grown into a credit allocation law," said an aide to Rep. McCollum. "We want to make it absolutely clear that you cannot refuse to make a loan in a neighborhood based on its racial characteristics."

The other advantage of the equal credit approach is that it applies to all lenders, insured or not. As much as bankers dislike the paperwork burden of CRA, they are even more upset that the law applies only to them and not their nonbank competitors.

"The ECOA applies to everyone, and that's more fair," said a bank lobbyist who follows the issue closely.

Bankers and industry observers are still looking closely at the McCollum proposal, trying to decide whether they would be better off if the Florida Republican wins.

"It's a not unreasonable approach," said Karen Shaw, president of ISD/Shaw Inc. "It would eliminate affirmative action and quotas but call for vigorous enforcement of the anti-discrimination laws."

In any event, nobody in the industry believes that fair-lending laws are going to just go away.

"CRA is a little anachronistic," said one bank industry lobbyist. "But you can't just drop CRA and not replace it."

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