Regulators have clarified parts of the Community Reinvestment Act rules, but postponed action until next year on more controversial provisions.

In guidance presented as a series of questions and answers, the four banking and thrift agencies refined the definitions of community development lending, affordable housing, and letters of credit.

But the agencies proposed guidelines only for CRA data collection and for community development lending outside a bank's assessment area, and they deferred for at least a year recommendations on how Internet-based banks should meet reinvestment obligations.

Industry officials criticized the guidelines as too little, too late.

"I don't understand why it took so long to get these out," said Paul A. Smith, senior counsel at the American Bankers Association. "They are adopting changes they first proposed in October 1997."

Catherine P. Bessant, president of community reinvestment at Bank of America Corp., questioned why regulators did not finalize advice on small- business loan refinancings and renewals. Confusion over whether renewals and refinancings are counted as small-business loans has been a major sore spot for the industry, which argues there is no reason to count renewals but not refinancings.

"We really need a lot of clarification," Ms. Bessant said. "A large part of the exam process right now involves fights over what counts and what does not count."

"It is frustrating for the industry not have more guidance," said Jo Ann S. Barefoot, a partner at KPMG Barefoot Marrinan. "We are getting pressure to have the CRA data be more accurate, but there is continued confusion over how to do it."

Malloy T. Harris, a national bank examiner at the Office of the Comptroller of the Currency, said the agencies are trying to resolve this question. "We are hoping to be able to do something fairly quickly," he said, "but we probably will not make changes for 1999 because most institutions are dealing with year-2000 computer problems."

Ms. Barefoot also questioned why regulators decided not to issue CRA advice for Internet banks. "They are certainly punting on the substantive issue of how these banks should be looked at and what their obligations should be," she said.

Mr. Harris said there is not a pressing need to release advice for Internet-based banks, as only a few such institutions exist. "We want to look more closely at the types of activities Internet banks are involved in," he said.

The agencies also proposed awarding CRA credit for projects that promote economic development in a broader region or state, even if the money is not spent directly in the bank's assessment area. The bank, however, must be located in this broader area.

The bulk of the 134-page document contained advice that is effective immediately. Changes include new guidelines on when examiners should award CRA credit for community development projects. The rules currently say a bank may get credit if the "primary purpose" of the project is to aid low- and moderate-income consumers.

Bankers and examiners often disagreed about what "primary purpose" means. The guidelines clarify that any project created "for the express purpose" of achieving community revitalization qualifies for credit, even if a majority of the project does not benefit low- and moderate-income people.

The agencies also clarified the meaning of "affordable housing," saying examiners may look at a range of variables such as local rents, median housing costs, and the number of low- and moderate-income people in the community. They rejected calls by some to use a formula based on living expenses and income.

Letters of credit will count for CRA, but regulators said they may not be reported as small-business loans. Rather they should be listed separately and presented to examiners.

Also qualifying for CRA credit under the service test are so-called EFT '99 accounts, which the government wants banks to establish for recipients of federal benefit payments. These accounts would eliminate the need to mail millions of checks every month.

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