The Community Reinvestment Act's effect on low-income lending is unclear and should be rigorously studied, a Federal Reserve Board official said Thursday.

In a speech to the National Economists Club, Fed Governor Edward M. Gramlich said approximately $120 billion in new loans were made under CRA in 1997 alone. But he said it is possible that many of those loans would have been made without CRA.

Even if the 1977 law has made it easier for low- and moderate-income people and communities to obtain credit, Mr. Gramlich said, it does not monitor loan terms and so cannot directly control predatory lending practices.

"I'm not really taking a position on ... whether it is on the whole a good thing," he said. "But I do think it has been responsible for a lot of change out there in the world, some of which might be quite positive, some of which might be negative."

The CRA is not a big burden on banks, said Mr. Gramlich, who chairs the Fed's consumer and community affairs committee. CRA loan losses are similar to those on non-CRA loans, he said, and CRA loans sold on the secondary market often go at "roughly market rates."

Moreover, Mr. Gramlich said, the repercussions of a subpar CRA rating are minimal. Merger applications can be held up by a poor CRA record, but less than one merger in a thousand has been derailed that way, he said. The only other danger is public embarrassment at the hands of community activists.

Mr. Gramlich said a variety of issues should be studied, including whether banks should be held more accountable for poor CRA ratings; whether the law has helped raise property values and tax revenues in poor communities; whether it has reduced housing discrimination; whether it should be applied equally in wealthy and poor neighborhoods; and whether it has had an indirect effect on predatory lending.

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