WASHINGTON Federal Deposit Insurance Corp. Chairman Donna Tanoue said Wednesday that a bank should get Community Reinvestment Act credit for assisting a minority-owned institution, even one far from its assessment area.
Such a scenario would be a win-win situation for both minority-owned institutions that need investment and support and other banks and thrifts that could count their assistance toward satisfying CRA, according to the text of a speech she delivered to the National Bankers Association in Chicago.
It is a simple fact that most banks do not have minority-owned institutions in or near their assessment areas, she said. Why should they be denied the opportunity for CRA credit for providing capital or operational or managerial assistance to a minority bank that needs it?
Ms. Tanoue made it clear, however, that the minority institution would have to serve low- and moderate-income customers to qualify the assistance for CRA credit. Banks can already get credit for assisting minority-owned institutions within their assessment areas.
Federal regulators could address this issue individually or in a comprehensive review of existing regulations, she said. The agencies are not scheduled to review CRA regulations until 2002, but Ms. Tanoue said in a speech in June that she would like work to begin this year.
Ms. Tanoue said that she is particularly concerned about smaller minority banks and thrifts, many of which are reporting lower profitability, higher noninterest expenses, and lower average asset yields than their peers. These banks have trouble, she said, competing with larger institutions for experienced employees, diversifying credit risk exposure, and holding down overhead costs in urban areas.