Back in 1990, alarm swept through the banking industry over the prospect that Community Reinvestment Act ratings might be made public. Individual bank scores had always been confidential, and the fear was that weak ratings, once revealed, would be grist for the headline mill.
That nightmare never materialized; only a tiny percentage of banks, mostly very small ones, have received poor CRA marks, and publicity has been scant. But these days, a nasty headline would be tantamount to a light slap on the wrist. The industry is now convulsed by another CRA issue whose implications are far scarier and more far-reaching: prosecution on charges of lending discrimination. Instead of dealing with banking regulators who might be inclined to be more understanding, banks and thrifts are being called on the carpet by the Department of Justice and the Department of Housing and Urban Development (HUD)--new players with an overtly political agenda and a generally deaf ear to bank protestations.