WASHINGTON -- The Community Reinvestment Act successfully delivers $4 billion to $6 billion a year to low-income areas without employing a large bureaucracy, Federal Reserve Board Governor Lawrence B. Lindsey said Monday.

That fact spells success, Mr. Lindsey said at an American Enterprise Institute seminar on CRA.

"We often focus on the glass being half empty," Mr. Lindsey said. "But in reality, the glass is half full."

Recent Home Mortgage Disclosure Act data, which indicate that banks are making more loans to members of minority groups, support this view, he said.

While CRA is working, the public perceives otherwise because both bankers and community groups have their own substantial concerns with the regulations that enforce it, he said.

Bankers have charged that the law lets regulators intervene in bank business, he said, but community groups charge that banks still fail to meet local credit needs.

"This creates the incorrect perception that the program doesn't work," he said. It also leads the agencies to propose changing the rules.

Emory University business professor George J. Benston disputed Mr. Lindsey's view of CRA as a success, saying it had damaged efforts to develop inner-city areas.

The law ensures that banks avoid low-income areas out of fear that they won't be able to close unprofitable operations there, he said.

"We feel CRA should be repealed," Mr. Benston said. "We believe it is harmful and it is not serving who it is supposed to serve."

Clifford Rosenthal, executive director of the National Federation of Community Development Credit Unions, said communities need CRA to persuade banks to maintain branches and to support local credit unions.

Without these CRA-inspired services, he said, inner-city residents would become even more dependent on loan sharks, check cashing operations, and pawn brokers. Mr. Lindsey said that banks are only a part of community development. Local governments and others must also want a neighborhood to recover.

"Banks are not necessarily the villains in this game," he said. "They are part of the process."

CRA's biggest benefit is that it forces talented people to get involved with community development, Mr. Lindsey said. "It drags people with that kind of knowledge into the process," he said.

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