Acceding to a critical General Accounting Office report, the Federal Reserve Board said on Monday that it will write guidelines detailing how protests under the Community Reinvestment Act are factored into decisions on large-bank mergers.

The GAO report, issued Friday, said such guidelines were necessary and that they should explain how the Fed weighs CRA concerns raised in public comments, as well as the types of analyses it relies on and when Home Mortgage Disclosure Act data are used.

After reviewing a draft of the report, Fed Chairman Alan Greenspan said he agreed with the GAO. "We believe that a written guide to the process -- addressing, in particular, the role of public comments in board decisions on bank holding company applications -- would serve a constructive purpose," he wrote in a Sept. 14 letter to the GAO.

The report was requested by House Banking Committee members Maxine Waters, D-Calif., and Bernard Sanders, I-Vt. Another GAO report, on how mergers affect fair-lending law enforcement, is expected to be published in two to three weeks.

Studying six mergers completed between 1995 and 1998, the GAO reviewed CRA evaluations, approval orders, and Fed summaries of the public's complaints. -- Katharine Fraser

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