Federal regulators this week pledged to speed approvals for banks trying to customize their Community Reinvestment Act compliance.
When CRA rules were revamped in April 1995, a new option let banks set their own CRA requirements. Under the "strategic plan option," banks develop CRA goals, get comment from the public, and obtain regulators' approval. Once a plan is approved, a bank seeking an "outstanding" CRA rating is guaranteed that grade if it meets its own goals.
However, since January 1996 when this option became available, few banks have tried it.
To help bankers develop acceptable strategic plans, the Federal Deposit Insurance Corp. has issued 22 pages of guidelines that break down the process into seven steps. The guidelines, made available on the FDIC's Web site Thursday, include a simple, two-page yes/no checklist.
The FDIC has received 17 plans, and five have been approved. "They haven't been used as much as I would have thought," said Carmen J. Sullivan, director of the FDIC's division of compliance and consumer affairs. "I don't think we as an agency did as well as we should have in rolling these out. Our initial approval times were quite extensive."
Eleven national banks have sent plans to the Office of the Comptroller of the Currency, which has approved six. The approval process can be frustrating. For example, Citicorp's credit card bank in South Dakota filed its plan with the OCC in July 1996 and finally withdrew it Thursday.
In a letter to bank executives dated Tuesday, Ms. Sullivan promised quick approvals for strategic plans that follow the guidelines.
One of the toughest parts of filing a good strategic plan is setting measurable goals, Ms. Sullivan said. To help, the FDIC guidelines explain that goals must be quantifiable. Banks have five options:
Designate a percentage of total assets and net income to CRA lending.
Specify how much will be lent to a particular area or project.
Establish lending ranges for different loan categories.
Create a menu of activities with weighted point values, and state goals in point totals.
Link goals to funding requirements of public programs or to other external indexes as long as there are quantifiable standards.