Stoking an already heated debate over the Community Reinvestment Act, executives at large banks are claiming that new examination methods are just as costly and cumbersome as those they replaced.

The complaints come as federal regulators complete a pilot project intended to find ways to make the examinations more efficient. The exams were supposed to focus on lending actions rather than documentation, but bankers insist that examiners are still demanding reams of documents to support their reinvestment activities.

"We have not seen our documentation requirement lessened in any way," said Catherine P. Bessant, president of community reinvestment at BankAmerica Corp. "In fact, many people would argue that the documentation requirement has become even more intense."

Regulators acknowledge the problem.

"There have been growing pains," said Stephen M. Cross, the Office of the Comptroller of the Currency's deputy comptroller for community and consumer policy. "We are very concerned about them and are working hard to make sure that our examiners do not request extra documentation."

New guidelines, expected by the end of March, will explain how much paperwork is required and which loans qualify for credit under the CRA, he said. "At the end of the day, we will be responsive to at least some, if not many, of the concerns that bankers are raising," Mr. Cross said.

The CRA is facing its biggest legislative threat since its 1977 adoption. Senate Banking Committee Chairman Phil Gramm wants to create a safe harbor from CRA protests for banks with "satisfactory" or "outstanding" ratings, while several House Republicans support replacing the law outright with an anti-redlining statute.

Regulators revamped the rules in 1995, replacing a system that required banks to document meetings with activists with one focused on lending, investment, and service to the community. The rule took effect in July 1997. "The new rule will make CRA more effective and less burdensome," then-Comptroller Eugene A. Ludwig promised when the rewrite was adopted.

Seven big national banks participated in the pilot project, which started in the first quarter of 1998. Ratings were awarded to most of the banks late last year. Only Fleet's rating has been released; its New Jersey bank earned a "satisfactory," down from an "outstanding," the OCC said.

Officials at banks said CRA reform has not lived up to its billing.

"The whole purpose of the rewrite was to reduce paperwork and documentation, but regulators have now come back and said you need to have more documentation and paperwork," said Agnes Bundy Scanlan, managing director of corporate community development at Fleet Financial Group. "It doesn't make sense."

"The medium and larger-size banks that are doing the bulk of the work in the urban areas have a significantly increased burden," said David C. Fynn, senior vice president at National City Bank, Cleveland.

Bankers said portions of the rule are unclear. For example, regulators take into account local market and economic conditions when assessing a bank's CRA performance. But this "performance context" is not well defined under the rules, so to cover themselves, banks flood examiners with data defending their lending, investment, and services.

Mr. Cross said it is purely optional for a bank to provide this information. "The idea behind the performance context is not to have a lengthy document," Mr. Cross said. "It is instead meant to be bits and pieces of information that help explain the performance a bank is reporting."

Mr. Fynn, however, said bankers so fear a CRA downgrade-and what it could mean for future mergers-that they are compelled to prepare lengthy analyses of their performance. "You cannot expose yourself to having the examiner come in and do things that you haven't prepared for," he said. "I have to understand the performance context."

Fleet's Ms. Scanlan also complained that examiners failed to give CRA points for letters of credit, mixed-income housing projects, and mortgage and small-business loan refinancings. "It is important that these products count," she said.

Mr. Cross said most of these loans do qualify under the CRA. "If the examiners are saying we are not going to give it credit, then the banker needs to go up the chain of command to get it clarified," he said.

Renewals and refinancings where no new note is created are the only types of loans that do not qualify because regulators feared banks would artificially inflate their small-business totals by frequently renewing loans.

Mr. Cross said relief is on the way. The guidelines due next month are expected to give a bank credit the first time it renews a loan each year. Subsequent renewals during the same year would not count.

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