WASHINGTON — Bankers who seethe and tremble at the sound of the letters C-R-A have a defeatist attitude, says Bank of America Corp.’s Vickie B. Tassan.

Community Reinvestment Act commitments must be made with a profit motive — not just for regulatory credit or to score public relations points, says the Charlotte, N.C., banking company’s senior vice president for community development.“You can do good and make money,” Ms. Tassan said in a recent interview. “You can have your mission and financial goals and they are compatible.”

Ms. Tassan said Bank of America has the track record to prove it. She oversees its hundreds of alliances with local groups and nearly two dozen partnerships with large national organizations. It has public commitments in excess of $3 billion, the lion’s share of which goes to the Neighborhood Assistance Corp. of America, a housing advocacy group based in Jamaica Plain, Mass.

If bankers invest in a plan or give money to a group with the assumption that they will never recoup that investment, they are looking at the requirement the wrong way, she said.

“Below-market money isn’t going to be profitable,” she said. “The investments have to be sustainable. You need products that make a return — a return that you can live with.”

Though Bank of America is just starting to crunch its data to show how much it earns from each alliance, Ms. Tassan pointed to strong loan production numbers to show that its alliances are working and bringing in new, sustainable business. In 2000, Bank of America made 1,603 loans to NACA mortgage borrowers. The group says that almost 100% of the borrowers who came through its program with Bank of America are in their homes and making payments — a statistic that NACA chief executive officer Bruce Marks offers as proof that lending to low- and moderate-income borrowers is no riskier than lending to higher-income groups.

Additionally, 98% of Bank of America’s NACA customers said they would do business with the company again.

Ms. Tassan emphasized that banks only get CRA credit for results. Just making a public commitment is not enough. Not until the low-income borrower signs the papers or until the affordable housing unit gets built does a bank get to claim CRA credit.

She also cautioned that achieving profitability is not easy, and requires innovation.For example, she said, another Bank of America partner, the National Council of La Raza, persuaded the company to donate $10 million to its Hope Fund in 1999. The Washington-based La Raza, the largest Latino advocacy organization in the country, loans the money for specific projects — for example, to a developer who will build affordable single-family homes. When the developer sells the homes, Bank of America gets new mortgage clients and the developer repays the fund.

That is the kind of project that comes from a mature, successful partnership, she said — but such successes are not instant. Banks forming strategic alliances should start out small, she said, “and look for affiliates that have specific deals.” Once a small project gets going successfully, the bank and community group can discuss bigger plans.

After coming into her current position in 1993, Ms. Tassan said, she quickly realized that she alone could not maintain all the community relationships.

“You need one-on-one regular and frequent communication,” she said. “Each group needs a relationship manager,” she said, and bank employees can take on those roles without quitting their day jobs.

Something as simple as sending affiliates all press releases on community development, management changes, and other company news is a good way to keep partners in the loop and connected, she said.

And forging true partnerships also means knowing when to agree to disagree, she said.

“Just because you provide them with money does not mean you get to tell them what to do,” Ms. Tassan said. “There will be times when you don’t agree and that’s okay.”

Once relationships are established, she said, the bank needs to move beyond community development. “Look at alliances as a channel to deliver financial products to LMI [low- and moderate-income] borrowers and communities.”

Working with its partners, Bank of America has been able to reach clients it never would have found on its own, Ms. Tassan said. And the community groups help the company meet its Home Mortgage Disclosure Act Data requirements.

For example, if Bank of America has not reached parity — an equal amount of deposits and loans — in a specific census track, it can turn to a partner like NACA that will canvass the neighborhood looking for potential borrowers. NACA uses troops of volunteers who go door to door to bring people to its meetings. Then NACA workers walk them through the loan application process and bring them to the bank — all ready to go.

How to find community partners seems the key question, Ms. Tassan said, but opportunities abound. “They find us,” she said. “You really don’t have to look that hard.”

Adding to the CRA challenge is the “sunshine” disclosure requirement in the Gramm-Leach-Bliley Act of 1999, which requires banks and community groups to disclose certain CRA agreements and communications.

Some complain the requirement is too burdensome. Ms. Tassan argued otherwise. “It’s the price of doing business with strategic alliances,” she said. “The added regulatory burden is not that difficult.”

Bank of America advises its partners to err on the side of caution and disclose more, rather than less, when complying with the regulation. “They’re not happy about it either,” Ms. Tassan said, but all sides have just learned to cope with the extra requirement.

With regulators poised to solicit industry input as part of an upcoming review of CRA rules, Ms. Tassan would not to say what specific things Bank of America officials would lobby to change, but hinted they would focus on streamlining examinations.

“The regulation itself is pretty brief and to the point,” she said. The problem is “more with how it is executed and the exam procedures,” she said.


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