WASHINGTON - Draft guidelines for examiners fall far short of delivering the relief from paperwork that bankers had expected under new Community Reinvestment Act rules.

Bankers who have seen the draft - the regulators have not publicly released it - said it appears that all the agencies have done is incorporate the existing 12 assessment factors into tests for lending, service, and investment.

"Nothing has changed," one banker said. "We are not out of the 'needs assessment' business."

But Steve Steinbrink, a top official at the Office of the Comptroller of the Currency, said the draft exams will be improved.

"Just like all procedures, we tested them, found some flaws, and we're correcting them," said Mr. Steinbrink, who is a senior deputy comptroller. "It is our intention and goal to reduce the burden on banks during a CRA exam and we expect to achieve that goal."

The regulators did deliver on several promises. The draft rules are brief - only 30 pages, including attachments. They also are clear and easy to read.

However, bankers are worried about how examiners will use new grids - with ratings across the top and performance factors down the sides - designed to measure performance under the lending, service, and investment tests.

For example, in the lending grid examiners must grade a bank's responsiveness to the credit needs of the community. These bankers, who requested anonymity, said the grid doesn't measure actual lending. Rather, they said, it rewards banks that create reams of paperwork showing what they have done to respond to the community's needs.

The draft examination procedures, obtained by American Banker last week, still must be approved by the four banking and thrift agencies.

The regulators spent nearly two years rewriting the CRA rules, which require financial institutions to serve their entire communities. The final version, approved April 19, was supposed to transform the focus from filling out paperwork to measuring actual lending.

To achieve this, regulators simplified a system of 12 assessment factors with lending, service, and investment tests. Banks with more than $250 million in assets will be subject to the new rules as of July 1, 1997, although institutions can opt in earlier.

The examination guidelines show that many of the existing process-based requirements remain.

The bankers also complained about the grids examiners will use to judge investment and service to the community. The investment matrix, bankers said, rates institutions on their responsiveness to community development needs rather than on the amount of money invested.

They also criticized the service matrix, which requires a bank to tailor services, including hours of operation, to the convenience and needs of the community. The only way to do that is to produce studies on the community's preferences, the bankers said. That will require more paper, without producing more loans.

The exam procedures also spell out how regulators will determine a bank's assessment area. Examiners are instructed to determine if the area consists of one or more metropolitan statistical areas, if it includes all areas where the bank has branches or ATMs, if it consists of whole census tracts, if it does not reflect illegal discrimination, and if it does not arbitrarily exclude low-income areas.

If the bank's assessment area violates any of these provisions, the guidelines allow the examiner to choose a new delineation.

The fear that an examiner could vastly expand the delineated community will force a bank to collect market data, such as commuting patterns, to support its decision, bankers said.

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