With a more activist administration in Washington, an increasingly vocal corps of community activitst, and wider gaps between the haves and have-nots, the ingredients are in place for tougher Community Reinvestment Act regulations.

Can a rise in the number of CRA challenges by community groups be far behind? No. It is thus time for banks to identify and implement challenge-resistant measures.

The good news is that there are such measures. Even better, most community groups prefer cooperation to confrontation. They will respond to outreach efforts by banks.

The first step is to eliminate the hesitancies that some bankers have about meeting activists, and the fears that some activists may behave in a contemptible manner.

Finding Common Ground

Give these potential adversaries a chance to earn your contempt. It is possible, perhaps even likely, that they won't, Indeed, the dialogues could generate sparks of mutual respect and uncover areas in which there is common interest.

Recognize, too, that challenging banks on CRA grounds doesn't make an activist a bad person. Community groups were given a tool by Congress with which they can prod banks into being more responsive to local needs. Why shouldn't they use it?

Having shed the bias that "all community groups are up to no good in their dealings with banks," your next step is to identify the organizations that are worth working with. Seek them out; don't wait for them to come to you. They may not and another bank will reap the benefits of working with them.

Then you can move into the documentation requirements and take more symbolic steps to help avoid CRA challenges.

Importance of Record Keeping

Aside from helping bankers recall what occurred during previous meetings, the documentation can be useful for CRA examinations. It verifies that a bank is reaching out to its community in order to ascertain needs.

React quickly to community organization requests for a dialogue. A request to meet needn't be viewed as a command, but it is entitled to the courtesy of a prompt reply. And if the decision is made not to meet with the group, a clear explanation as to why is also owed the organization.

Sometimes a simple recognition of a group's concerns, coupled with an explanation as to why the bank cannot help (and maybe even a suggestion as to where assistance can be provided) is all that is needed to satisfy the person who made the request for a meeting.

Send decision makers, not lawyers or junior management, to represent the bank. When community organizations ask to meet with bank representatives, they want to believe they'll be communicating with officers who can act on their requests.

The chances are activists+ will be represented by their top people. If the bank sends juniors or lawyers who are merely present to satisfy regulators, the community leaders are likely to feel slighted.

The following measures are also advised when preparing to meet with activist groups.

Form an advisory group of community leaders. Rather than just dealing with one or two organizations, it would be more informative to have a cross-section of local group leaders meet with the bank on a periodic basis to discuss community issues. But don't form an advisory group for show. That's worse than doing nothing.

Educate bank staff about the bank's community relations. Letting employees know that a bank is actively promoting economic growth in the community is a good morale builder.

It also tells an important public the bank takes its CRA responsibilities seriously - and it may spur some useful activity on the part of individual employees.

Educate the public through the media. There is nothing wrong with publicizing a bank's commendable efforts to help its community. Indeed, it meets the CRA requirements about letting potential customers know of a bank's services.

Moreover, a well-earned reputation as a financial institution that is meeting the credit needs of its community will have challenge-minded activist looking elsewhere for action.

Don't, however, lower credit standards to satisfy activists.

Mr. Cole, who recently joined Canadian Imperial Bank of Commerce in New York as a vice president, corporate communications, was formerly senior associate at Sims & Associates.

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