WASHINGTON -- The Federal Reserve's Consumer Advisory Council has overwhelmingly rejected a resolution calling on Governor Lawrence B. Lindsey to rescue himself from voting on the Community Reinvestment Act revisions.
The council, composed of bankers and community activists, voted 20 to 5 against the nonbinding resolution, according to Fed staffers at the Thursday meeting.
Council member John R. Adams, a vice president of CornStates Financial Corp. in Philadelphia, said the group did not believe it had enough information on the issue to warrant asking Mr. Lindsey to recuse himself.
"That was most of the driving issue there," Mr. Adams said. "The issue should have been explored more before it was laid out for a vote."
Mr. Lindsey, who was out of the office and could not be reached for comment, has spoken at numerous fontms during the past two months, criticizing a provision of the new rules requiring banks to report the race and gender of business people who borrow less than $1 million.
He has said the data can be misleading because banks use flexible standards for small business loans.
The vote came two days after community groups protested what they said is the Fed's footdragging on CRA reform. At that rally, Center for Community Change general counsel Allen Fishbein said Mr. Lindsey should remove himself from the CRA debate because of his comments about the data reporting requirements.
Mr. Fishbein said at the rally that regulators should not decide an issue until after the public comment period closes. Outside ethics experts disagreed.
Geoffrey C. Hazard, a former Yale Law School professor now with the American Law Institute, said public officials only need to keep an open mind when they are acting in a judicial capacity, such as deciding if a bank broke a regulation.
When deciding the merits of a new rule, public officials can be as vocal as they want because they are acting like legislators, he said.
"It may be imprudent," Mr. Hazard said, "but that's not an adjudicative function. It's a legislative function."