WASHINGTON - A senior regulator on Monday outlined an interagency effort to update provisions of the Community Reinvestment Act.

Julie L. Williams, chief counsel for the Office of the Comptroller of the Currency, said that banking and thrift regulators are still working on a preliminary proposal to alter several key CRA provisions, including the policy of determining assessment areas by branch location.

"The language of the statute, with its references to 'local communities,' could begin to sound anachronistic in the future if facility-based delivery systems tied to particular geographies are overtaken by boundless technology-based systems," Ms. Williams said in a speech at a Consumers Bankers Association conference on CRA in Arlington, Va.

"It's even been argued that the current CRA definition creates a disincentive for institutions to extend credit in low- and moderate-income communities where there are market opportunities, if they happen not to have branches there," Ms. Williams said. "That's led to suggestions that institutions be permitted to designate non-branch-based assessment areas."

She said the service test on branches also has to be reevaluated now that fewer people go to branches and tellers.

"Would the goals of CRA be better served by encouraging financial institutions to focus on developing innovative nontraditional means to address financial services needs?" Ms. Williams asked. "Or, as some tell us, should financial institutions continue to be encouraged to deliver banking services through traditional physical facilities because they are necessary, especially in low- and moderate-income neighborhoods where consumers may not have access to electronic banking services?"

The proposal is expected to be released next month.

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