WASHINGTON -- The controversial reform of the Community Reinvestment Act will be revised and released for another round of public comment. The new CRA proposal will be unveiled in four to six weeks, according to Stephen M. Cross, the Comptroller of the Currency's deputy for compliance management. In a speech in Dallas Tuesday, Mr. Cross said the market share test - the provision criticized most by bankers - would be broadened. The original proposal focused on comparing a bank's market penetration in well-to-do areas versus low-income neighborhoods. Under the new plan, Mr. Cross said examiners would rely on a variety of factors, including the income level of individual borrowers, the size of a small business, the amount of community development lending, and the extent to which a bank uses flexible underwriting standards to increase lending to low-income and moderate-income people. "Where appropriate, examiners would include market share calculations in their analysis to provide a context in which to evaluate the bank's CRA performance;' he said. "However the market share calculation alone would not determine the bank's rating under the lending test or its composite rating." Mr. Cross also said the small bank assessment option will be retained but without the 60% loan-to-deposit ratio. Community bankers vigorously fought the 60% test, complaining that it would make it impossible for many banks to take advantage of new, streamlined CRA' exams.
Data collection also will be simplified in the new plan.
Reporting under the Home Mortgage Disclosure Act would not have to be duplicated for CRA compliance, he explained. Also, data on small business and farm loans would be narrowed to what banks already report in midyear Call Reports.
However, Mr. Cross said, information about this smaller universe of loans might be expanded to include information like the borrower's race and gender.
The reporting requirement for consumer loans may be eliminated, he said. Banks that wants to include this information in their CRA exam would be permitted to collect it. "CRA has a reputation for being one of the most burdensome of all the laws that apply to banking," Mr. Cross said. "It doesn't have to be that way." The burden, he said, stems from standards that are unclear and inconsistently applied. The coming reform will clarify what's expected of bankers and ensure the consistent application of the new rules, he said. Not all the news was good. Mr. Cross also said that wholesale and limited-purpose banks would be judged not only on community development investments and services but on actual loans made to satisfy CRA. Community groups argued that a ban should have to earn a "satisfactory" rating under the lending test to reeve an overall rating Of satisfactory or higher. President Clinton called for CRA reform in July 1993, explaining he wanted to emphasize performance over paperwork. Regulators originally thought they could finish an overhaul by the end of 1993. It took that long just to publish a proposal. The agencies received 2,000 letters a piece on the original plan. Another wave is expected during this second round of comments. Mr. Cross steered clear ofputting a deadline on a final reform package. Previous deadlines have come and gone as the agencies have spent 13 months sparring with each other, the industry, and consumer groups over various provisions.
